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Lawmakers seek way to soften blow of spikes in price of natural gas

The attack of the dekatherms may sound like a sci-fi flick, but it may be a real-life conflict headed straight for your wallet.

When a polar vortex traveled considerably further south than usual over Presidents Day weekend, it wreaked havoc with energy systems of all types in states unaccustomed to such cold snaps. Infrastructure that wasn’t sufficiently winterized failed, reducing the supply of natural gas.

Commodities traders buy and sell natural gas in dekatherms. Under normal circumstances, natural gas trades at around $3 per dekatherm. But, when that weather swept southward, prices climbed to as high as $231 per dekatherm at a Kansas trading hub.

Minnesota’s largest natural gas supplier, CenterPoint Energy, has said the result may be increases in annual household gas costs of 50% or more. In a filing with the Public Utilities Commission, the company said it paid $500 million for natural gas over a 10-day period in February, more than it spent during all of the last fiscal year.

But help may be on the way in the form of HF2216, sponsored by Rep. Jamie Long (DFL-Mpls). It would establish one program that would defray high natural gas bills for low-income households and another that would create a zero-interest loan program for municipal utilities paying for unusually high natural gas prices.

Replaced by a delete-all amendment, it was approved, 15-1, by the House Climate and Energy Finance and Policy Committee Wednesday, and forwarded to the House Ways and Means Committee.

Its companion, SF2132, sponsored by Sen. David Senjem (R-Rochester), is on the agenda for Thursday’s meeting of the Senate Energy and Utilities Finance and Policy Committee.

Reflecting the urgency of the issue, the bill’s appropriations are for the current fiscal year, with the intention that the programs would be launched as soon as possible to circumvent the big leaps in utility bills already being experienced by many Minnesotans.

As amended, the bill would appropriate $100 million that the Commerce Department would transfer to utilities in order to fund bill credits for low-income Minnesotans. Another $15 million would provide loans to eligible municipal utilities.

Long said his aim is to have the appropriations be taken from federal stimulus funds and not the General Fund.

“It was a remarkably high price spike,” Long said. “And the impacts are coming into focus. … An average CenterPoint customer pays $672 a year for natural gas, but is expected to pay $394 more because of this spike. The intention of this bill is to hold customers harmless for this.”

Katie Sieben, chair of the Public Utilities Commission, said the commission has opened an investigation into the natural gas price spike.

“It’s estimated that Minnesota customers will see surcharges of $200 to $400,” she said. “Utilities will be asked about spot market purchases, which were responsible for these spikes. We do know that stored gas was used that was purchased in the summer months when the price was low. But your constituents will see significant financial harm without some form of relief.”

Rep. Glenn Gruenhagen (R-Glencoe) asked Long if there would be refunds to customers if it’s found that there was price gouging involved in the spike.

“If there is a settlement that comes to the state, that would reimburse these programs,” Long said.

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