Published May 26, 2022
Earlier this week, two judges recommended that natural gas customers should bear the full $660 million cost of a February 2021 winter storm. CUB is pushing back to make utility companies share the burden – and we could use your help.
In February 2021, Winter Storm Uri caused natural gas prices to spike to historic levels. Four of Minnesota’s natural gas utilities – CenterPoint Energy, Xcel Energy, Minnesota Energy Resources Corporation (MERC), and Great Plains Natural Gas Company – collectively incurred $660 million in extra costs over just a few days of purchasing gas for their Minnesota customers. In some cases, utilities spent more to procure gas during this short period than they did for the entire previous year. Most Minnesotans who receive natural gas from these companies have already been paying an extra Winter Storm Uri-related surcharge on their monthly gas bill since September or October 2021 while state regulators consider whether to require the utility companies to share in the costs.
CUB has been fighting to ensure that Minnesotans do not bear all of the costs of this storm. Most recently, we have advocated in a contested case assessing the “prudency” of the utilities’ decisions during the storm. In this case, the utilities had the burden to prove they acted prudently (i.e., reasonably) when they incurred extraordinary gas costs during the storm based on what they knew or should have known at the time. The utilities attempted to meet this burden by filing testimony from numerous internal and external experts familiar with the utilities’ operations and decisions during the storm.
CUB engaged outside consultants with expertise in the natural gas industry who also filed testimony in the contested case. CUB’s experts argued that the utilities could have and should have taken actions to reduce their costs during the storm – and yet they did not, knowing that customers would pick up the tab. Therefore, CUB argued, the utilities should be prevented from passing large amounts of their storm-related costs onto their customers.
All told, CUB recommended that the utilities be disallowed from charging customers more than $150 million – $82.4 million for CenterPoint, $67.6 million for Xcel, and $8.1 million for MERC. (Due to resource constraints, CUB did not make recommendations with respect to Great Plains.) The Minnesota Department of Commerce and the Minnesota Office of the Attorney General (OAG) similarly recommended significant disallowances for each utility.
Two administrative law judges reviewed the testimony and legal briefs of the parties involved in the contested case, along with public comments. On May 24, the judges issued reports outlining their findings for each of CenterPoint, MERC, Xcel, and Great Plains. In each report, the judges found the utility acted prudently and, therefore, recommended that customers should pay 100% of the extraordinary costs each utility incurred when procuring gas for Minnesotans during the storm.
We are deeply disappointed in the ALJs’ recommendations. Fortunately, their recommendations are just that – recommendations. Ultimately, the Public Utilities Commission (PUC) will have the final say in whether the utilities can recover the full amount of their storm-related costs, or if they will need to share the burden and cover some of those costs themselves. Though the PUC’s decision will be informed by the ALJs’ reports, we are confident the PUC Commissioners will closely examine the record, including expert witness testimony offered by CUB, the Department of Commerce, and the OAG. We are hopeful they will come to different conclusions about the prudency of the utilities’ actions during the storm.
We continue to regularly hear from consumers who are concerned about their rising natural gas bills, and who are frustrated by the storm-related surcharge that will continue to appear on those bills for months or years to come. Meanwhile, the utilities – particularly CenterPoint, Minnesota’s largest natural gas utility – seem to be doing just fine. A recent Energy and Policy Institute report highlighted the fact that the CEO of CenterPoint Energy, Inc (the Texas-based parent company of the gas utility serving Minnesota) made a total of $37.8 million in compensation in 2021. For reference, this amount is double or triple the compensation of other large utilities’ CEOs, 366 times as much as the average CenterPoint employee, and 515 times Minnesota’s 2020 median household income. In a February 22, 2022 earnings call, where CenterPoint Energy, Inc. reported its 2021 year-end earnings, this same CEO noted that “2021 was a great year for [CenterPoint Energy, Inc.] with quarter after quarter of meeting or exceeding expectations.” Finally, CenterPoint Energy, Inc. even gained over a billion dollars in net, after tax proceeds through a merger involving CenterPoint Energy, Inc. and another Texas-based gas company that is currently being sued for price gouging after it made more than $2 billion during Winter Storm Uri.
If this seems unfair to you, it does to us, too.
What Can You Do?
If you are frustrated by the Winter Storm Uri-related surcharges appearing on your natural gas bill, let the PUC know how they are affecting you and your family. The PUC needs to hear from Minnesotans about the impact of these extra charges, and whether it is fair for customers to be on the hook for the full amount.
You can file a comment with the PUC using the form below, or through one of the other options offered here. Please note that your comment, including your name, email, and any other personal information you include, will be part of the public record. Your address will not be included.
Please keep an eye on the CUB blog, too. We will continue to publish updates about this issue as it develops. We expect the PUC to hold a hearing on this issue in late July, and to issue a written order identifying the outcomes of that hearing in August.