Minnesotans likely to see big spikes in home heating bills

Tom Hauser
Updated: February 23, 2021 07:33 PM
Created: February 23, 2021 07:19 PM

It's not unusual for Minnesotans to see home heating bills go up during cold weather months because they're using more natural gas.

However, price spikes this month will go way beyond the usual seasonal increases.

The Minnesota Public Utilities Commission (PUC) voted Tuesday to investigate why natural gas prices spiked 50 times higher than average last week.

"We believe it to be significant," says Amber Lee of CenterPoint Energy, who testified at a special hearing of the PUC. "Usually our gas prices do not have these spikes."

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She didn't give an estimate of the impact on the average home heating customer. However, Xcel Energy, the state's second biggest gas utility, says they initially estimated the average residential customer bill of about $50 this February. Now the estimate is much higher.

"With the recent natural gas prices spike, we're preliminarily thinking that we incurred about 300 dollars per residential customer," Xcel Energy's Amy Liberkowski told the PUC.

The price increases are largely due to a rare winter cold snap across the southern U.S. at the same time sub-zero temperatures were common in the north. However, Minnesota Senator Tina Smith has called for an investigation to make sure natural gas providers were not engaging in price gouging during the cold weather event.

The PUC voted 5-0 to open a formal investigation to examine the impact of the national spike in prices on customers and the state’s gas utilities.

It's likely given the severity of this problem state and federal assistance could be required," PUC Chairwoman Katie Sieben said about the impact on residential customers.

In a news release after the meeting, the Minnesota Department of Commerce and the PUC outlined the focus of the investigation.

"While Minnesotans had reliable power to keep their lights on and stay warm, the Commission learned that some utilities had to buy gas at prices that were at least fifty times higher than average between Feb. 12 and Feb. 17. The formal investigation will examine the impact and look for ways to mitigate the impact on utility customers."

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Although Minnesotans will see big price spikes, they likely won't show up on their bills for several months while the PUC investigates what caused the increases.

At the hearing, regulated gas utilities, which serve the majority of Minnesotans, reported that unexpected gas costs in mid-February will not show up in customer bills immediately, but may be delayed by several months pending approval by the PUC.

The Minnesota Attorney General's Office is also monitoring the price hikes.

"While there's never obviously a good time to experience some sort commodity price spike like this having it happen during a pandemic is probably the worst time we could have something like this happen," said Ian Dobson with the attorney general's office. Major utilities say many customers are already behind on paying their bills because of the pandemic.

Gov. Tim Walz also weighed in on the issue late Tuesday.

"While we are just beginning to understand the implications of last week’s spike in natural gas prices, it is important that we work together and proactively to mitigate the impact on families and small businesses," he said in a statement. "I am glad the Public Utilities Commission is opening an investigation, and my administration, through the Department of Commerce, will advocate for Minnesota ratepayers during that process."

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