Minnesotans furious that they have to pay for Texas’ deep-freeze problems

residential natural gas meters
Photo by Robert Nickelsberg/Getty Images

Texas’ deep freeze didn’t just disrupt natural gas supplies throughout Lone Star country—its effects rippled across the country, extending as far north as Minnesota. There, gas utilities had to pay $800 million more than they anticipated during the event, and Minnesota regulators are furious.

“The ineptness and disregard for common-sense utility regulation in Texas makes my blood boil and keeps me up at night,” Katie Sieben, chairwoman of the Minnesota Public Utility Commission, told The Washington Post. “It is maddening and outrageous and completely inexcusable that Texas’s lack of sound utility regulation is having this impact on the rest of the country.”

The gas and electric markets in Texas are lightly regulated and highly competitive, which has pushed companies to deliver energy at the lowest possible cost. But it also means that many companies were ill-prepared when the mercury dropped. To save money, they had skimped on winterizing their equipment. As a result, gas lines across the state—which has about 23 percent of the country’s reserves—quite literally froze. The spot price of natural gas soared to 70-times what it would normally be in Minnesota, and gas utilities paid a hefty premium when they used the daily market to match demand.

In a twist, the biggest gas utility in Minnesota is CenterPoint Energy, a Houston-based company that also supplies a large swath of Southeastern Texas. The company said it spent an additional $500 million on gas that week in February, and it has asked Minnesota’s utility commission for permission to add a surcharge to customers’ bills. The surcharge not only seeks to recoup the additional money CenterPoint spent on natural gas, it also includes 8.75 percent interest. The company expects that each customer would shoulder a burden of $300 to $400.

CenterPoint has told the Minnesota utility commission that the financial burden is so great that it would like to start billing customers in May rather than September, when such adjustments usually occur. Yet in public statements to investors, CenterPoint CEO David Lesar said that money wouldn’t be a problem.

“More importantly for our investors, we will not have to seek any incremental equity to handle our increased storm-related liquidity needs,” Lesar said in a February 25 earnings call. “As we have mentioned many times, we are fortunate to work in constructive regulatory jurisdictions and fully expect these costs to be recoverable in a timely manner. And in many of our jurisdictions, where these costs are the largest, we already have the ability to recover some carrying costs. We are in the process of working with all of our regulators on that.”

CenterPoint claims that beginning the surcharge in May will be beneficial to customers since the interest charges will be lower as soon as the company’s gas bill is paid off. Utilities are allowed to bill customers for legitimate expenses. The company appears to be planning similar requests in Arkansas and Oklahoma.

Minnesota’s other major natural gas utility, Xcel Energy, also said it will be seeking to recover its additional expenses from Texas’ deep freeze, but it wouldn’t be charging customers interest. Xcel estimates the interest charge would be around $25 million, while CenterPoint expects its charge will be $60 million.