Energy Surcharge Statement For March 2019
Energy Surcharge Implementation
Dear Valued Customer:
As you may know, EP Minerals has an Energy Surcharge Policy that becomes effective when natural gas exceeds $4.40/decatherm (dT) (as set forth in our Terms & Conditions and on epminerals.com). Natural gas pricing has been above the $4.40/dT level since mid-February which forced us to implement the surcharge on February 13th, 2019.
For the past five years, natural gas has been below the $4.40/dT level. As you heard from me last year, one of our main natural gas sources, Canadian Pipeline Enbridge, experienced a catastrophic explosion in October that shut the line down for several days. Force majeure was issued at the time which has since been removed. However, the pipeline is still experiencing intermittent flow levels and restricted capacity, causing regular spikes in gas costs (for more details see link below).
These external forces have pushed our average natural gas index to $9.70/dT as of this writing resulting in a computed surcharge of $42/ton. Please visit our website at www.epminerals.com or go directly to the Energy Surcharge Policy by clicking on the link below to see the daily figures and details about our policy.
During this difficult time, we have been working on ways to minimize the impact of the pipeline explosion and have taken on massive amounts of extra costs beginning in October 2018. Starting Feb 13th, 2019 we began to pass on a portion of these costs at a rate of $21/ton. We will continue a partial surcharge equal to $21.00/ton for the month of March. The intent of a partial vs full surcharge is to minimize the impact on your business. This applies to Lovelock and Vale shipments. For Clark, NV shipments, the Energy Surcharge will be $12.00/ton.
We will continue to do everything possible to minimize this situation. We anticipate things getting back to normal in the next few months and will monitor closely, keeping you updated.
We thank you for your business and support and look forward to continuing to work with you.
Vice President, Global Sales & Marketing