Commentary

State regulators need to take a tougher line on gas monopolies | Opinion

March 26, 2021 6:00 am

CenterPoint Energy charging customers a hefty fee to pay for price spikes during the February polar vortex. This image is of the 2014 polar vortex. Getty Images.

CenterPoint Energy recently announced that it will charge its local gas customers an additional $350 due to the polar vortex that struck everywhere from Minnesota to Texas. That’s over a week’s pay for a minimum wage worker, and another reason state regulators should be looking to help us wean off of this volatile fuel. 

Aside from costly price spikes, gas use presents several safety and health risks. Residents of the Twin Cities likely recall news of the gas explosion that destroyed a building on the campus of Minnehaha Academy, or the 50-foot torch ignited by a gas main break near a south Minneapolis Cub Foods. Gas safety risks extend into each of our homes. Poorly maintained furnaces or water heaters can produce deadly carbon monoxide. Even a meal cooked on a well tuned gas stove can create a literal “supper smog,” with nitrogen dioxide levels exceeding EPA guidance for the outdoors, if prepared without adequate ventilation. On top of the localized risks, leaks during extraction and transport of methane — the primary ingredient in fossil gas — have a climate change impact 80 times greater than carbon dioxide. 

Minnesotans need the government to step in, because we aren’t allowed to shop around for a better deal. Like their electric counterparts, Minnesota gas utilities have a government-granted shield from competition. The state’s Public Utilities Commission, known as the PUC, has five members appointed by the governor, including an open seat right now. The PUC is supposed to ensure that these private companies — lacking the discipline of market competition — act in the public interest. Since you and I are captive customers of the gas company, the state has the power and responsibility to ensure that CenterPoint Energy does what’s best for us. 

There are plenty of things legislators and the PUC could do to protect us from the market volatility and the health and safety risks of using gas. 

For one, the state could require the utility’s shareholders to share the risk of polar vortexes with its captive customers. Eight states — including Missouri, Vermont and Oregon — require their utilities to ease the burden on captive customers when gas prices spike. These risk-sharing agreements help lower customers’ bills during climate change-induced shocks, while also providing incentives for good behavior. A gas company (or an electric utility) with some skin in the game is more likely to hedge its fuel costs to avoid unexpected spikes. 

The state could also require utilities to protect customers from high energy bills by substantially increasing requirements for weatherizing homes. There are thousands of homes in Minneapolis and other cities that are so old they lack even basic wall insulation. But the state has a modest energy savings goal of only 1.5% per year. Despite the goal, overall gas use is rising, due to population growth and other factors. In a promising move, CenterPoint Energy in 2014 publicly committed to helping Minneapolis reach ambitious energy affordability goals, including widespread home retrofits by 2025, which are far beyond its state conservation mandate. On the current timeline, however, CenterPoint won’t even hit the goal by 2050. 

CenterPoint Energy could accelerate efficiency adoption by simplifying energy financing and making it more inclusive. Right now, approximately half the state’s residents pay into utility efficiency programs but can’t benefit from them, because they still have to provide money — for insulation or Energy Star furnaces — out of pocket. In a proposal currently before the PUC, the utility would pay for energy efficiency improvements to people’s homes up front, recouping the investment back via the utility bill. Programs like this have been shown to dramatically increase efficiency and lower energy bills across the country. A recent study by the University of Minnesota showed significant promise for Minnesota residents from these “inclusive energy financing” programs.

The state also has an opportunity to prepare for a safer and more affordable future by allowing cities to adopt what is called a “stretch” code, with more ambitious energy savings for new buildings. These stretch codes, used in several other states, could include provisions for all-electric buildings. Without the cost of connection to the gas network, the health risk of carbon monoxide or gas combustion ranges, the safety risk of fires or explosions, or volatile fuel prices, Minnesotans would have safer, more comfortable and more affordable homes. 

The recent polar vortex event makes it twice in seven years that Minnesota heating bills have spiked due to climate change and an over-reliance on fossil gas. As Minnesotans, we can’t choose our gas company, but our legislators and state regulators can tighten their oversight of these monopoly companies to protect us and make moves to wean us off this risky fuel. We need to tell them that gas is energy we can’t afford.

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John Farrell

John Farrell is co-director of the Institute for Local Self-Reliance and founding member of the Energy We Can’t Afford coalition, aiming to end reliance on fossil gas for electric generation and home heating.

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