May 24, 2022
Minnesota natural gas utilities acted “prudently” during a historic February 2021 storm, so they should be allowed to fully pass on $660 million in extra gas costs to their customers, according to two administrative law judges.
The judges’ conclusions, released Tuesday, rejected contentions from two state agencies that because of utility mismanagement during the storm, ratepayers should not be charged the entire $660 million tab.
The Minnesota Public Utilities Commission (PUC), which has the ultimate say on the matter, last year ordered an investigation into the prudency of the charges — 62% of which were run up by the state’s largest gas utility, CenterPoint Energy.
The state Department of Commerce and Attorney General’s Office concluded that CenterPoint, Xcel Energy, Minnesota Energy Resources Corp. (MERC) and Great Plains Natural Gas made critical mistakes in their gas procurement procedures before and during the storm.
The Attorney General’s Office argued that the utilities should not be allowed to collect any of the $660 million in extraordinary storm costs, the judges’ report said. The Commerce Department says tens of millions of dollars in charges should be disallowed by the PUC.
But Jessica Palmer-Denig and Barbara Case, the administrative law judges, ruled that the utilities’ strategies were sound and the $660 million in extra costs were “prudently” incurred.
“Prudence is not evaluated using the benefit of hindsight,” the judges wrote in their report on CenterPoint. “Instead, the gas utilities’ actions and decisions must be judged on the basis of whether each action and decision was reasonable at the time … and based on the information that was or should have been known.”
Administrative law judges’ decisions are not binding, but they are influential on the PUC. Still, the PUC, which is slated to decide the matter this summer, also takes into account the positions of the Commerce Department, the Attorney General’s Office and other parties.
The judges’ decisions were “definitely disappointing,” said Annie Levenson-Falk, executive director of the Citizens Utility Board (CUB) of Minnesota, a watchdog group for residential ratepayers. “The judges’ recommendations failed to hold the utilities accountable.”
CUB also recommends that the PUC disallow tens of millions of dollars in charges to ratepayers due to alleged utility mismanagement.
CenterPoint, which has nearly 900,000 customers in Minnesota, said it appreciates “the judges’ thorough review and conclusion that CenterPoint Energy acted prudently.”
Wholesale gas prices in Minnesota and many other states soared in February 2021 when a storm hit Texas and other natural gas-producing states. Temperatures plunged, gas field equipment froze up and supply cratered just as demand soared.
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