When that severe frostbite hit Texas in February, Lone Star State could not help but comment on its pain.
With its poorly equipped natural gas systems, the Rio Grande’s freezing cold freezed Texas, 4 4.7 million customers in northern Mexico were left without electricity. More than just Texas. The market price of gas has jumped 30 times from Southern California to the west. And before the Canadian border was lifted, Minnesota gas utilities, which entered the daily market to meet demand, said they had to pay about $ 800 million more than planned in just five days when the Texas freeze failed. accessories
“The ugliness and neglect of utility regulation in Texas makes my blood boil and wake me up at night,” said Katie Siben, chairwoman of the Minnesota Utilities Commission. “Crazy, screaming, and unforgivable, the lack of utility regulation in Texas is having such an impact on the rest of the country.”
The Texas market is so large, second only to California, that its natural gas industry is so dominant that when things go wrong, the consequences can be felt across the country. And in a state that avoids regulation, forcing energy producers to cut costs as deeply as possible to stay competitive, things went dramatically wrong on Valentine’s Day.
Minnesota’s largest gas companies plan to recoup their costs by adding a surcharge to their customers’ accounts, which must first be approved by the State Utility Commission. Such adjustments to take into account winter prices typically take effect in September, but Minnesota’s largest gas service, Houston-based CenterPoint Energy, says the financial grip is so large that it wants to start charging customers next month. 9% interest until extraordinary expenses are paid.
At the same time, the company’s CEO David Leshar assures investors that the company has a lot of cash,, weather costs are not a concern at the national level.
State by state, from the shores of the Persian Gulf to the ies, from the Ozark to the shores of Lake Supererio, utility regulators have launched an investigation into what went wrong, and gas companies have moved in to pass on their exclusive costs to customers. Investigators say they are looking for evidence of rising prices and market manipulation. In Minnesota, where temperatures plummeted to minus -20 degrees Celsius in February, and hardly a single customer lost gas or electricity, government officials are struggling to find a fair solution to the Texas blockchain.
Gasoline prices in Minnesota rose 70-fold to normal as supplies fell 39 percent to the state’s main commercial center.
“I do not think we still really understand what happened,” said state Sen. David Senjem, R-Rochester, a former majority in the Minnesota legislature. “I hope they realize that it’s better to get their system a little stronger,” he said of Texas. “Ate avali. You can use stronger words, but it is better not to. They were caught, and so were the rest of us. “
Senjem sponsored a bill that would provide $ 115 million in government funding for overcrowded small community utilities. It passed the Senate և awaiting action in the palace. He expressed hope that the federal funds from the American Rescue Act could also be used.
Of the four major businesses in Minnesota, the focus is on CenterPoint, as it is the largest with 800,000 residential accounts. most aggressively sought help. and is based in Texas.
CenterPoint says it needs to charge its customers a monthly surcharge over the next two years to recoup the extra $ 500 million it spent on gas during the week of February. The interest on the surcharge will be 8.75%. According to the company, the total amount will be $ 300 to $ 400 for each residential account. And it wants to start billing right away, even before the utility committee sets out its position on what CenterPoint calls the “February market event.”
This approach is similar to the one the company is likely to offer in Oklahoma and Arkansas.
“We did not have any problems with the security of our gas supply in Minnesota,” said Amber Lee, Minnesota’s director of regulatory affairs. “And yet it was an extraordinary event.”
Following the March 15 filing, CenterPoint said immediate assistance was needed to “ensure the continued financial health of the utilities.” Without it, the company said, its credit rating would fall, and its ability to get credit would suffer. On April 9, he said the issue was “of the utmost concern.”
This is in contrast to the reassuring message from CEO Lesar in a telephone conversation with investors a week after the cold shock.
“We believe we have enough liquidity from our credit facilities to cover the costs of freezing,” he said. “We will bear a modest additional interest expense on some of these surplus costs until they can be recouped. We see this more as a targeted asset management challenge through which we can manage. ”
He boasted about his relationship with the company’s regulators and said he expects them to come through CenterPoint. “As we have said many times, we are fortunate to work in a constructive regulatory capacity; we fully hope that these costs will be recouped in a timely manner,” he said.
“This,” said Siben to the utility committee, “is a good argument, isn’t it, for not incurring costs.”
CenterPoint claims that its reason for receiving immediate assistance is to ease the burden on its customers, because the sooner the $ 500 million is repaid, the lower the interest charges will be. He says any delay will affect his credit rating, which will lead to higher borrowing costs, which will eventually be reflected in the bills.
In Minnesota, as in all states, legal utility bills are passed on to customers. And Lesard Grass’s view of the company’s prospects is based on the expectation that regulators can adhere to CenterPoint applications.
Company spokesman Ross Corson wrote in an e-mail: “We have a responsibility to address these extraordinary costs in a way that minimizes the impact on our customers while at the same time being financially responsible as a company.”
Minnesota’s second largest gas company, Xcel Energy, also wants to extend the cost recovery within two years, but said it would not charge interest, which it said would be $ 24.7 million in loans to cover its costs. The company, based in Minneapolis, estimated that each residential customer would be charged about $ 250. Minnesota Energy Resources said it hopes to recover $ 225 per customer. Greater Minnesota Gas, the smallest commercial company, said it had enough reserves in February and could avoid the market on the spot.
The U.S. Department of Commerce objects to CenterPoint’s request to launch additional billing in May. “We have a process set for the September adjustment date,” said Commissioner Grace Arnold. “There is no need to make an exception.”
He said that his department intends to find out whether the utility costs are reasonable, whether its preparation is reasonable. If so, he said, it is appropriate to pass the costs on to customers, but the analysis “will take some time.”
CenterPoint stores a certain amount of gasoline in the warehouse, some of it goes through futures contracts, և more “hinders” by paying in advance to enjoy a predetermined price. But some of its purchases are always on the market, and it says that in February, that amount was higher than normal, as the cold weather increased demand locally.
Attorney General Keith Ellison, a former Democrat, has been highly critical of CentrePoint.
It notes that interest will be charged to customers over a two-year repayment schedule, “at a time when many of them are already lagging behind.”
CenterPoint argues that the interest rate reflects the cost of borrowing its own capital, that it is a relevant item that should be added to its bills.
“The company has had to pay most of its natural gas costs since February, but those costs will only be recovered in the long run,” Corson wrote. “Prior to the restoration, CenterPoint Energy must finance these costs through a combination of debt and equity. “Given the unprecedented size of this financial liability, it is appropriate to include financial charges.”
Annie Levenson-Folk, chief executive of Minnesota Citizens Utility Board, asked in an interview why CenterPoint did not voluntarily reduce gas consumption when it saw rising prices.
He said utilities should show why they have so much hope in the local market. But he added that “there will be no way around. “These are big expenses that someone will have to bear.”
Natural gas, however, is a “substantial good,” he said, adding that ordinary Minnesota residents, the collateral for the Texas disaster, were innocent.
“You know, someone made a lot of money from people who needed to heat their homes,” he said. “And that is not true.”