Utility ratepayers have been asking, “Why are my energy bills so high?” Three major factors have come together to cause these unusually high rates.
We’re Paying the Consequences of a Texas Winter Storm
In February 2021, the five-day Winter Storm Uri in Texas ended up costing Minnesota utilities hundreds of millions of dollars. And now, for the most part, they have passed those costs back to us.
The storm caused catastrophic failures of fossil gas infrastructure in Texas, resulting in gas prices escalating steeply in the midst of an already heavy winter heating season. Our major utilities convinced the Public Utilities Commission (PUC) that they should not have to absorb those higher costs and that they be carried instead by ratepayers. The costs are now on our utility bills and will continue for years to come.
Natural Gas Prices Are Extremely Volatile
Ratepayers’ natural gas bills have been impacted the most due to increases in market prices. Minnesota produces no natural gas and instead imports 100 percent of what we use. The natural gas market is international and impacted by many factors, such as increased demand, unrest and military actions in many parts of the world (like Ukraine and Russia), and the deliberate decisions by producers to produce less.
Over the last two winters, natural gas prices have risen precipitously and our utilities pass them straight through for us to pay. Thus, every natural gas price increase in the market results in an increase in our bills.
We’re Currently Paying an Interim Rate Increase
Several of our local natural gas utilities, including CenterPoint Energy and Xcel Energy, have submitted proposals to the PUC to increase their rates. While the PUC evaluates these requests, the utilities are allowed by state law to raise their rates by an interim, or temporary, amount. The first interim increase was implemented in 2022, so we are currently paying that increase already. In the case of Xcel Energy, for instance, the interim increase approved was more than 8% for average residential customers.
If the PUC decides to approve a lower rate increase than the interim rates, the utility must refund the difference, with interest, to its customers. If the PUC approves a final rate higher than the interim rates, the utility cannot charge customers the difference.
Xcel Energy, for example, requested an increase of 21.2% from its customers over a three-year period (2022 through 2024). Following huge public outcry, Xcel has modified their numbers somewhat but, since the final decision will not be made until June of this year, we continue to pay the interim increase with the potential for additional increases by the PUC decision.