Local natural gas utilities weigh in on price spike impact

WDIO
Updated: February 24, 2021 06:12 PM
Created: February 24, 2021 05:53 PM

The Minnesota Public Utilities Commission is investigating an increase in natural gas prices and Sen. Tina Smith also asked the U.S. Department of Energy to investigate this due to concerns about possible price gouging.

"We learned that some Minnesota utilities had to buy natural gas at more than 50 times the average price and now through the public utilities commission, we have a formal investigation going on to find out what is the impact and how to protect our consumers from getting hit with high utility bills," said Aditya Ranade, the deputy commissioner for the energy resources division in the Minnesota Department of Commerce.

State and federal officials are looking to get to the bottom of extremely high prices for natural gas during the polar vortex.

"This could mean hundreds of dollars of increased costs to consumers depending on where you live in the state and how you get your natural gas. Across the whole state, it could be billions of dollars of increased utility costs," said Smith.

However, the Duluth gas operations supervisor says this won't really affect their 27,000 customers.

"We have storage gas on both pipelines. We have two pipelines that feed the city so we have storage on both those pipelines. We use our storage. We use our base load contracts. We had to buy very little daily gas so our customers in reality will face just a very small, incremental rate," said Pete Upton, the gas operations supervisor for the City of Duluth.

Superior Water, Light and Power serves about 12,000 customers and said their base gas load is covered by contracts that have more price certainty and have other contracts in place to purchase more gas on high use/peak days.

In a written statement, Rob Sandstrom, the president of SWL&P said: "Over the last two weeks due to the extreme cold and the incredible demand on the system due to the wintry weather across the nation including Texas, we had to go to market to meet demand above our base plan and we did see higher prices due to the extreme cold that extended into Texas and impacted gas supply."

Sandstrom added he doesn’t know yet what the customer billing impact is going to be but will be working with their regulators to help mitigate impacts to customers.

"I also want to clarify that we don’t profit from higher natural gas prices, we are just a distributor and our commodity costs essentially get passed through to our customers. We definitely saw a price spike in the commodity costs for a few days, but bills will tend to be higher regardless as customers used more gas to heat their homes during the polar vortex," said Sandstrom.

Xcel Energy also issued a statement saying:

“While we expect there to be impacts due to the high natural gas prices during the cold snap, we’ll work with our regulators and stakeholders to minimize the effects of those prices on our customers.”

A spokesperson for Xcel also said they don’t make a profit on fuel costs for either heating or producing electricity, as they are passed directly to customers. Further stating last week’s price increases will likely have a noticeable impact on both our Minnesota and Wisconsin customers’ natural gas heating bills in the future through their cost recovery mechanisms but don’t expect large impacts to electric customer bills.

Xcel serves about 475,000 natural gas customers and about 110,000 natural gas customers.

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