Texas storm spikes local natural gas prices

The impact of unusual winter storms slamming Texas is going to be felt locally through higher utility bills.
While area residents had reliable power to stay safe and warm during the recent stretch of unseasonably cold weather, natural gas prices dramatically spiked the past week due to national demand issues, most notably originating out of Texas.
Roger Wareheim, general manager of Owatonna Public Utilities, called the occurrence “a very rare thing.” As a result, he said residents could pay as much as eight times more than normal. However, Wareheim and his staff hope to develop a plan so that the steep hike won’t be passed onto consumers all at once.
The Minnesota Public Utilities Commission called a special meeting on Tuesday to investigate the matter. Owatonna Public Utilities also met on Tuesday to determine how to proceed with the rates. OPU is solely responsible for setting local rates, according to Wareheim.
In Owatonna, natural gas prices usually peak at $1 million for a single month during the winter months to service about 12,000 customers. OPU, Wareheim said, is facing a bill of $12 million just for February. Last week, a couple of days reached $2 million per day in natural gas costs.
“Nobody has ever seen this high of costs,” Wareheim said. “Natural gases have never hit this price. Ever. The price got bid way up into crazy land.”
The spike in costs caused OPU to issue a Peak Alert last week. The alert requested customers to reduce their natural gas consumption to control costs. Some of the suggestions included: turning down the thermostat by 2 degrees, taking shorter showers and avoiding baths, keeping shades closed at night and open during the day, and replacing furnace filters, so the furnace didn’t have to work as hard.
By issuing a Peak Alert, Wareheim said OPU shaved off about 3% of its normal daily load, saving about $200,000.
Wareheim said with the cold temperatures in Texas, the issue quickly facing the utility industry was that the wellheads froze. “They couldn’t get the gas out of the ground to keep up with the demand,” Wareheim said.
By late last week, natural gas prices had already returned to more moderate levels. But, Wareheim said, the damage had already been done, leaving utility companies scrambling to figure out how to pay for the spike.
“This needs to be passed on to the customers,” Wareheim said, adding OPU isn’t the only utility facing the sharp increase.
 “We are sensitive to our customers’ needs,” he said, adding he hopes to spread the increases out over at least six months.