February 24, 2021
ST. PAUL — The electrical grid in Minnesota largely withstood the punishingly cold weather that enveloped the state in recent weeks, unlike the grid in Texas, where winter storms last week caused widespread blackouts.
But the surge in natural gas demands, both for heat and for power, and the resulting spike in prices may be passed on to utility customers in Minnesota. Some could be charged hundreds of dollars more in utility bills because of it, regulators were told this week, costs that would be spread out over the course of next year.
“I think what the event has shown of the last week,” Public Utilities Commission member Joseph Sullivan said Tuesday, Feb. 23, “is that our system is resilient from a reliability perspective, but my concern is that from an economic perspective, we are vulnerable.”
The state utilities commission met Tuesday with Minnesota’s largest natural gas utilities for a virtual meeting on the price spike. As temperatures plunged nationwide and the demand for power generation and heating soared, commissioners were told, Minnesota utilities kept pace by purchasing outsized volumes of natural gas on the spot market, where prices exceeded 50 times their normal average between Feb. 12 and 17.
Further exacerbating the price spike was the winter weather that blanketed the South, which stalled the production of natural gas at processing plants.
Unlike the cold weather spell that struck Minnesota in January 2019, utility officials said Tuesday, the temperatures observed in recent weeks caused only a few disruptions, primarily affecting customers under what are called “interruptible” contracts. Such arrangements, according to the U.S. Energy Information Administration, allow for lower electricity or natural gas rates.
In exchange, utilities can, with little notice, ask interruptible customers to curtail their consumption or cut them off from power completely in order to meet the demands of higher priority users.
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