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Fallout from February cold snap shows up in Fargo natural gas bills

In many cases, increases are linked to natural gas price hikes sparked by severe February cold snap.

KEM Electric power supplier, a neighboring coop of Dakota Valley Electric Cooperative covered in frost and ice on Feb. 3.jpg
A site of the KEM Electric Cooperative, a neighboring utility of Dakota Valley Electric Cooperative, covered in frost and ice on Wednesday, Feb. 3. Special to The Forum
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FARGO — Xcel Energy customers are starting to notice jumps in their natural gas bills that are tied to a cold spell that struck the U.S. in February, sparking widespread natural gas shortages and price spikes for natural gas across the country.

Dave Wallis, an Xcel customer in Fargo, said his normal monthly natural gas bill is $30, but a recent bill was $74.

Wallis, who is retired and formerly worked as a photographer for The Forum, said he checked with neighbors and one informed him their natural gas bill similarly went from the usual $34 to about $80

Earlier this year, Xcel Energy, which serves the Fargo and Grand Forks areas, asked for approval from the Public Service Commission to recover nearly $33 million of unexpected costs stemming from the cold weather, and the PSC ultimately approved the request.

Natural gas cost adjustment began in July for residential natural gas customers of Xcel Energy, with the average increase on monthly bills anticipated to range from about $6 to $34 , depending on usage, with the temporary rate adjustment ending on Sept. 31, 2022, said Matt Lindstrom, Xcel Energy senior media relations representative.

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Without knowing a particular customer's situation, Lindstrom said, it is hard to say why a particular bill went up as much as it did, but he added that a number of things could impact a customers’ bill.

For example, he said, if a customer's natural gas bill is combined with their electric bill and they’ve been using a lot of electricity and running their air conditioner frequently, that could lead to a higher bill.

"Increasing their natural gas usage could also impact their bill," he added.

Lindstrom said extreme and prolonged cold in North Dakota and across the country in mid-February caused a substantial increase in demand for natural gas. That increase in demand, combined with weather-related natural gas supply constraints, resulted in a dramatic short-term increase in wholesale natural gas prices for many utilities around the country, he said.

"Our top priority during the extreme weather in February was to ensure all customers had reliable access to heat and electricity so they could remain safe. While we follow natural gas price hedging policies, high fuel costs were still incurred during that unprecedented event," Lindstrom said.

Xcel is committed to helping customers who may be struggling with their bills, he said. "They can contact us and we will work with them to set up a payment plan and connect them with other resources that can help."

Lindstrom said customers with concerns about their bills can visit xcelenergy.com/energyassistance , send an email to inquire@xcelenergy.com or call the company at 800-895-4999.

Brian Kroshus, one of three members on the North Dakota Public Service Commission, said that by law utilities have the right to request rate adjustments to recoup costs they incur, adding that if commissioners could have legally turned down Xcel Energy's request, they would have.

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But, he added, "It would have resulted in an appeal, without question. There was just no legal basis for us to say no, and the courts would have overturned it."

Kroshus said what the PSC approved in the case of Xcel's request was an "adder" to utility bills amounting to $3.50 per dekatherm of natural gas consumed. With the current typical cost of natural gas at about $3.50 per dekatherm, the adder brings the monthly residential cost of natural gas to about $7 per dekatherm.

Kroshus said the PSC chose that formula for addressing Xcel's request, because residents who are able to reduce their demand can mitigate the increase to some degree.

Some natural gas customers raised questions about whether the way the state of Texas organizes its energy delivery system had something to do with the jump in local natural gas bills, but Kroshus said the main problem was essentially the cold weather that struck Texas and many parts of the U.S. in February.

Frozen wellheads

"The largest single contributing factor, without exception, was the fact that Texas provides approximately 26% of the nation's natural gas supply," Kroshus said.

"During the February cold snap," he added, "half of that production was curtailed, and not by choice, but because the wellheads were freezing up."

Kroshus said some asked why the February cold snap impacted natural gas bills in the eastern part of North Dakota more than it did in the west.

He said the answer to that question is that places like Bismarck have easier access to natural gas storage as well as natural gas from the Bakken Formation.

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Kroshus said the situation could be improved for eastern North Dakota if pipeline transportation could be enhanced, but he said such projects have not materialized, perhaps in part because of the tendency for pipeline projects to become the targets of protests.

Pricing for natural gas has been favorable for quite some time, he noted, due in large part to advances in drilling technology and increased output of natural gas from wellheads in the Bakken Formation, which extends into parts of western North Dakota.

He said the current cost of natural gas to consumers, even with the temporary adder in pace, "is about on a par with what gas pricing was 10-12 years ago."

It is unknown whether the rise in natural gas bills will lead to more consumers seeking assistance in paying their bills, according to Sidney Schock, who manages the economic assistance division of the Cass County Human Services Zone.

Schock said that between Oct. 1, 2020, and May 31, 2021, about 1,800 households in the county received some form of assistance in paying heating bills. He said he expects a similar number may sign up when the assistance program resumes on Oct. 1.

Whether more people will apply for assistance this October in light of higher natural gas bills is hard to predict, he said.

Schock noted that between Oct 1, 2020, and late July of 2021, many of the approximately 1,800 households in Cass County that were receiving heating assistance were also eligible to benefit from federal pandemic dollars that could be put toward their electricity bills.

On two occasions, he said, once in early spring of this year and again in July, about $460 for every household on assistance was paid to energy providers, with the funds then made available as household credits to consumers.

All told, Schock said, energy assistance payments in Cass County amounted to just under $1.3 million between October of 2020 and late July of this year.

Cass County residents who have questions regarding eligibility for energy assistance may call the economic assistance division of the Cass County Human Services Zone at 701-241-5747.

Related Topics: ENERGY AND MINING
I'm a reporter and a photographer and sometimes I create videos to go with my stories.

I graduated from Minnesota State University Moorhead and in my time with The Forum I have covered a number of beats, from cops and courts to business and education.

I've also written about UFOs, ghosts, dinosaur bones and the planet Pluto.

You may reach me by phone at 701-241-5555, or by email at dolson@forumcomm.com
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