May 13, 2021
Steep bills for natural gas customers during a crippling winter storm in February could end with some changes in what’s allowed for Minnesota utilities if two state agencies have anything to say about it.
The Minnesota Department of Commerce says consumers are being socked with $90 million in extra natural gas costs because utilities failed to draw enough gas from storage during the supply crisis that stemmed from the storm, which paralyzed the nation’s gas-producing regions.
Meanwhile, the state Attorney General’s Office has called for limits on how much utilities can automatically charge consumers when gas prices skyrocket, as they did in February.
The two agencies, which represent the public’s interest in regulatory matters, weighed in as the Public Utilities Commission investigates the debacle.
With supply constricted and demand soaring, Midwestern wholesale gas prices rose at least 4,500%, leaving the average Minnesota household with extra gas charges ranging from $225 to $354, depending on their utility.
After reviewing utilities’ explanations, the Commerce Department said that outside of Xcel’s response, it was “disappointed with the general lack of creativity and appreciation for the scale of the impact the [price spike] will have on Minnesota ratepayers.”
CenterPoint, the state’s largest gas utility, expects to pass down roughly $500 million in storm-related gas costs, or $354 per average household. Xcel, Minnesota’s second largest gas provider, estimates ratepayers’ tab to be $215 million Minnesota; MERC, the third largest gas utility, $75 million; and Great Plains Gas, a small utility in rural Minnesota, $11 million.
The Department of Commerce found that while Minnesota utilities’ gas supply plans have “generally been adequate” in the past, the February storm proved they are not adequate in protecting consumers against price surges from extreme weather.
Storing natural gas is a hedge against rising prices. Utilities buy gas in the summer when prices are cheaper and inject it into underground storage spaces for winter use. For instance, storage accounted for 26% of CenterPoint’s supply plan for last winter.
The Commerce Department said the utilities turned to the natural gas spot market too soon in February instead of using up the stores. “The fact that Minnesota utilities did not maximize storage withdrawals was detrimental to Minnesota ratepayers,” the report said.
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