AG Ellison recommends PUC block gas companies from charging consumers $380M in winter-storm costs
AG investigation uncovered utilities could have reduced gas purchases during Winter Storm Uri price spike but failed to do so; instead conducted business as usual as if there were no emergency
July 7, 2021 (SAINT PAUL) — Minnesota Attorney General Keith Ellison recommended today that the Minnesota Public Utilities Commission (“PUC”) prohibit Minnesota’s natural gas utilities from charging utility ratepayers in Minnesota almost $380 million of the increased gas costs they paid during the 2021 President’s Day weekend. Comments filed with the PUC show that the Attorney General’s investigation uncovered numerous instances in which Minnesota’s natural gas utilities could have reduced natural gas purchases during the price spike but failed to do so, instead conducting business as usual as if there were no emergency.
The $380 million amount that the Attorney General’s office recommends the PUC disallow represents nearly half of the approximately $800 million in higher costs that Minnesota utilities paid when the price of natural gas dramatically increased during Winter Storm Uri — a cold spell that hit across the middle of the United States beginning on February 13, 2021 that was responsible for increasing demand for natural gas and freezing natural gas wells in the southern United States. Winter Storm Uri is known to have caused electricity blackouts in Texas due in part to freezing gas pipelines and coal supplies that fueled power plants, while increasing demand for heat.
“Shelter, heat, and light are human rights. Being able to afford your utility bills is essential for all Minnesotans to being able to afford their lives and live with dignity and respect,” Attorney General Ellison said. “While Minnesota utilities did not cause Winter Storm Uri or the run-up in natural gas prices, they should have reacted forcefully to the pricing emergency and used every tool at their disposal to reduce costs. Instead, our investigation shows they did not take these steps and continued to purchase natural gas as if the emergency did not exist. Minnesota’s residential and small-business consumers should not have to pay for this mismanagement.”
Utilities typically recover their fuel costs directly from ratepayers. The Attorney General’s recommendation to deny some of the utilities’ costs comes in response to an investigation that the PUC opened to review utilities’ actions during the pricing emergency. The PUC requested comments from utilities and other stakeholders on the amount utilities should be allowed to recover, and on the mechanism for recovery.
In response to that request, the Residential Utilities Division of the Attorney General’s Office — which is authorized in Minnesota state law to intervene on behalf of residential and small-business utility ratepayers at the Public Utilities Commission — conducted an investigation. The investigation uncovered and documented several ways that Minnesota’s natural gas utilities failed to reduce the cost of natural gas they purchased during the price spike, including:
- Failing to reduce gas purchases by “interrupting” customers who have contractually agreed to a lower rate in exchange for the ability of the utility to require them to stop buying;
- Failing to fully utilize “peaker” plants, which can reduce the need for natural gas for short periods with liquid natural gas and propane;
- Failing to fully deploy natural gas held in storage to reduce the amount utilities needed to purchase during the price spike;
- Failing to notify the public of the price spike so that homeowners and businesses could voluntarily reduce their consumption; and
- Failing to maintain a diverse mix of suppliers and pricing arrangements for natural gas that could have limited their dependence on high-cost sales.
In separate comments filed with the PUC, the Attorney General’s Office asked that any amount the PUC does allow utilities to recover from the price spike be recovered over an extended period in order to keep bills low, and that utilities shield low-income customers from high bills.