Attorney General Ellison helps save utility customers nearly $60M
After AG and partners intervene, PUC rules to disallow some natural gas costs utilities incurred during February 2021; rare for regulator not to allow utilities to pass entirety of gas costs onto customers
August 12, 2022 (SAINT PAUL) — At a hearing where Attorney General Keith Ellison’s office, the Minnesota Department of Commerce, and the Citizens Utility Board of Minnesota argued on behalf of ratepayers, the Public Utilities Commission yesterday voted to save customers of four Minnesota natural-gas utilities — CenterPoint Energy, Xcel Energy, Minnesota Energy Resources Corporation, and Great Plains Natural Gas Company — $58.6 million in natural gas costs.
“High prices are making it harder for us to afford our lives right now. But in winter, we Minnesotans can’t turn off our gas because bad weather in other states leads to a spike in our gas prices. But utilities can and should make every effort to limit the impact of those price spikes on us. When my office and our partners felt the companies hadn’t done enough to shelter us from high prices, we leapt into action and got results,” Attorney General Ellison said. “I’m proud we’ve saved Minnesotans almost $60 million, especially because it’s rare for public regulators to not let utilities pass on all their gas costs to customers. It’s a testament to the fight we put up to save Minnesotans some serious money.
“While this decision is a win for consumers, still too much of the utilities’ gas costs will get passed onto Minnesotans to pay. The utilities need to know my office will keep watching them and using our power under state law to fight to keep Minnesotans’ costs down,” Attorney General Ellison concluded.
In February 2021, a period of cold weather in the southern United States, notably Texas, led to increased demand and supply disruptions for natural gas. As a result, natural gas prices spiked to extreme levels across the country, which led to Minnesota’s natural-gas utilities’ incurring hundreds of millions of dollars in additional costs. The utilities asked the Public Utilities Commission for permission to pass the entirety of those costs onto their Minnesota customers.
The Residential Utilities Division of Attorney General Ellison’s office — which consistent with its duties under State law, advocates for the interests of residential and small-business utility ratepayers — took swift action to make sure Minnesotans did not pay more than they should for this gas, launching an investigation into whether the costs were reasonably and prudently incurred by the utilities. In comments filed in July 2021, Attorney General Ellison’s office provided evidence that the utilities had not acted reasonably or prudently in navigating the extreme pricing event, and that many of the costs they incurred were avoidable. Among other things, the office argued that the utilities should have curtailed their interruptible customers, deployed their peaking plants, and better utilized their storage withdrawals, all of which would have lowered costs. The Attorney General’s Office argued then the PUC should not allow the utilities to pass a total $370 million of their gas costs incurred during the price spike onto Minnesota consumers.
The Public Utilities Commission ultimately referred this matter to the Office of Administrative Hearings for an evidentiary hearing into the costs. The Department of Commerce retained an expert witness, who provided further analysis on the issues raised by Attorney General Ellison’s office as well as other issues. Attorney General Ellison’s office continued to support these positions through legal briefs and oral arguments before the PUC.
The Office of Administrative Hearings issued a recommendation to the PUC that the utilities be allowed to pass all their costs onto Minnesotans, including the ones Attorney General Ellison’s office and partners argued the companies could and should have avoided. Yesterday, however, the PUC decided otherwise.
- For CenterPoint, the PUC disallowed approximately $35.7 million, including disallowances of $16 million due to its imprudent use of storage resources, $12.4 million due to its imprudent failure to use its peaking plants, and $7.3 million due to its imprudent failure to curtail interruptible customers.
- For Xcel, the PUC disallowed approximately $19 million, including disallowances of $14.7 million due to its imprudent management of its peaking facilities and $4.4 million due to imprudent decisions in its load forecasting.
- For Great Plains, the PUC disallowed approximately $845,000, including $440,000 due to its imprudent use of storage resources and $405,000 for its imprudent failure to curtail interruptible customers.
- In the same hearing, the PUC also approved a settlement between Attorney General Ellison’s Office, the Department of Commerce, the Citizens Utility Board, and MERC to save MERC’s ratepayers $3 million that the Office had previously argued were imprudently incurred.
In all, in response to the dogged advocacy of Attorney General Ellison’s office, the Department of Commerce, and the Citizens Utility Board, the PUC ruled that the four gas utilities could not pass onto their customers a total $58.6 million in costs they incurred during the February 2021 spike in utility prices.