Utilities may not charge Minnesotans for entire cost of 2021 winter storm, regulators say

By: - August 11, 2022 5:15 pm

CenterPoint incurred nearly $409 million in extraordinary costs from the storm, but will not be allowed to pass on $35.7 million to customers, under a decision from the Minnesota Public Utilities Commission. Photo by Max Nesterak/Minnesota Reformer. 

The Minnesota Public Utilities Commission decided Thursday that three of the state’s largest gas utilities may not charge customers for the entire cost of gas during the 2021 winter storm that sent prices surging and froze critical gas infrastructure in Texas and Oklahoma.

The commission determined that the utilities could have done more to protect customers from sky-high prices and should bear some of the cost — albeit about a tenth of the nearly $662 million in so-called extraordinary costs the utilities incurred during just five days in February 2021.

Under the commission’s decision, utility companies Xcel, CenterPoint and Great Plains won’t be able to pass along $55.5 million of the costs from Winter Storm Uri. The utilities must also submit proposals to the commission on how to help protect customers from price spikes in the future.

A fourth utility, Minnesota Energy Resources Company, agreed in a settlement to bear $3 million of the $65 million in extra costs it incurred.

“Our job is to act in the best interest of the consumer and that is why we ordered a thorough investigation,” said Katie Sieben, PUC chair, in a statement. “Utilities could’ve done better to protect customers from the risks of these price increases. And, going forward they need to be more diligent as these extreme weather events are becoming more frequent.”

The decision comes after state officials at the Department of Commerce and Attorney General’s Office along with the non-profit advocacy group Citizens Utility Board challenged the utilities’ ability to charge consumers the full amount.

They argued each of the utilities could have done more to offset costs by tapping into their emergency reserves, limiting their gas purchases and having certain customers curtail their use.

Customers will save less than the state agencies and energy advocates wanted. The Department of Commerce estimated that the utilities spent $178.6 million more than necessary during the five-day storm through various missteps and argued customers should not have to shoulder that portion.

“Even though their final decisions were lower than what we recommended, we’re actually really happy with the result,” said Brian Edstrom, senior regulatory advocate at the Citizens Utility Board. “We think the commission took a really strong stand.”

A spokesperson for CenterPoint shared a statement saying the company appreciated the time the commission spent reviewing the costs and thanking the commission for acknowledging CenterPoint provided reliable service. The spokesperson said no decision had been made on appealing the decision.

A spokesperson for Xcel said the company was proud of the work its employees did to maintain service during the storm and is “evaluating the commission’s decision” before deciding “next steps.”

Minnesotans didn’t experience any gas shortages during Winter Storm Uri and were able to continue heating their homes as temperatures plunged to record lows across the state, reaching -19 in the Twin Cities and -50 near Ely. In Texas, meanwhile, hundreds of people are estimated to have died during the storm.

“They did provide reliable service to Minnesotans … and the utilities should be commended for that,” Edstrom said. “But customers don’t write a blank check for reliable service. Utilities have to balance their responsibility to provide reliable service with their responsibility to protect customers from price spikes.”

Minnesotans who use natural gas will be paying off the costs from the five-day storm for years under payment plans negotiated with the PUC.

Although the decision from the PUC will force utilities to share in some of the pain, the storm may turn out to be a boon for gas utilities.

CenterPoint, for example, received $1.3 billion in net, after-tax proceeds as the result of a merger with a company accused of price-gouging customers during Winter Storm Uri.

CenterPoint acquired shares of the company before the winter storm, after which the stock value shot up 20%.

CenterPoint incurred nearly $409 million in extraordinary costs from the storm, but will not be allowed to pass on $35.7 million to customers, under the PUC decision.

Xcel Energy incurred $179 million in costs, but will not be allowed to pass on $19 million to customers, under the PUC decision.

Great Plains incurred $8.8 million in extraordinary costs, but will not be allowed to pass on $885,000 to customers, under the PUC decision.

Great Plains did not respond to a request for comment.

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Max Nesterak
Max Nesterak

Max Nesterak is the deputy editor of the Reformer and reports on labor and housing. Previously, he was an associate producer for Minnesota Public Radio after a stint at NPR. He also co-founded the Behavioral Scientist and was a Fulbright Scholar to Berlin, Germany.