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Heating costs, driven by high fuel prices, pile on customers already behind on bills

Monthly compliance filings from the Minnesota Public Utilities Commission for three utilities that provide natural gas to more than 2 million customers across the state show average bills have climbed significantly since last year.

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Natural gas regulator mechanics TJ Brekke and Dan Dahl monitor gas flow pressure Feb. 24, 2021, at the regulator station at the corner of Riveness and Morris Thomas roads in Hermantown, Minnesota.
Tyler Schank / Duluth News Tribune file photo
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ST. PAUL — Minnesotans have seen their utility bills rise this winter in response to climbing energy prices. While the portion of customers behind on payments has remained steady, filings with state regulators show the amount they owe has grown.

In keeping with a general national trend of inflation, the price of fuels such as natural gas, propane and heating oil is substantially higher now than it has been in recent years. The upward trend in natural gas prices is driven by an overall increase in demand, but many Minnesota utility customers are also seeing higher bills due to natural gas price surges linked to the February 2021 Texas winter power crisis.

It was already apparent before winter that heating bills would grow, and the impact has largely been on Minnesota residents who already struggled to pay bills.

“People who have been financially well-off are generally doing OK still and the folks that have been in trouble are falling further behind,” explained Annie Levenson-Falk, executive director of the Citizens Utility Board of Minnesota, a utility customer advocacy nonprofit. “We’re not seeing a larger portion of customers being behind on their bills overall, but those people that are behind owe more now on average than they did two years ago.”

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Annie Levenson-Falk

Monthly compliance filings from the Minnesota Public Utilities Commission (PUC) for three utilities that provide natural gas to more than 2 million customers across the state show average bills have climbed significantly since last year.

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Filings for Xcel Energy show the average utility bill climbed from $115 in January 2021 to $158 in January 2022 — an increase of 37%. Filings from Minnesota Energy Resources, a natural gas utility that serves more than 200,000 customers in communities including Rochester, Detroit Lakes and Wadena, saw its average January bill jump from $98 in 2021 to $202 in 2022 — a 106% increase. The utility estimates the average customer will spend $44 extra per month to heat a home this winter.

But even with a jump in energy prices, Xcel, CenterPoint Energy and Minnesota Energy Resources have not seen a substantial increase in their percentage of customers late on bills, PUC filings show. For instance, in January 2022, 9.6% of CenterPoint’s 830,893 customers were behind on payments and on average owed $239. In the same month in 2021, 11.6% of customers were behind owing $227.

“This year’s higher costs of natural gas, both throughout the U.S. and globally, have been driven primarily by natural gas market conditions — an imbalance of market supply and demand,” CenterPoint Energy said in a statement. Demand increased significantly during 2021, while supply did not rise at the same rate. Colder temperatures in January, compared to last year, also raised customers’ heating bills.”

Cold Weather Rule

Natural gas prices are just one part of the picture. Minnesota’s Cold Weather Rule protects utility customers from having their natural gas or electric heating shut-off due to late payments between Oct. 1 and April 30, but the largely rural users of delivered fuels such as propane and heating oil do not have the same protections as companies can simply opt not to bring shipments. Propane prices have also climbed, with the overall price of propane in the Midwest at about $2.37 per gallon, a price not seen since 2014 , according to the U.S. Department of Energy.

Dan Josephson is Director of Energy Programs for MAHUBE-OTWA, a northwest Minnesota nonprofit serving the Lakes Area counties of Mahnomen, Hubbard, Becker, Otter Tail and Wadena. He said his organization is seeing more people seeking assistance. Applications had actually gone down over the last few years but programs are now seeing a rebound as COVID stimulus benefits dry up, he said.

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Dan Josephson is Director of Energy Programs for MAHUBE-OTWA

“This year we are seeing an uptick in people that are either coming back to the program that have been on the program for several years, or we are seeing people come in the door,” Josephson said. “Each and every day, we hear stories of or we have people calling in saying I just ran out of propane, I just ran out of fuel oil, I have no way of paying for more.”

Since October, Josephson’s program has given out around $4.6 million in energy aid and about half a million in crisis aid for people in need of immediate assistance.

“We’ve got more applications in the door right now than we had all of last year and last year we ran our program all the way until the second of September,” he said.

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Average energy assistance benefits tend to be higher in northern rural areas of the state where energy costs also tend to be higher. Roseau, Beltrami, Cass and Mahnomen counties ranked near the top for costs this year and had benefits in the 1,300-1,500 range — compared to under 1,000 in southern and Twin Cities metro counties.

“The areas that are more reliant on things like propane or heating oil will have higher costs — especially this year … It’s also a bulk cost thing, they’re filling up a whole tank all at once,” Minnesota Department of Commerce Commissioner Grace Arnold said. “The housing stock is a little bit older and so in many cases, the homes aren't as energy efficient.”

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Grace Arnold, Minnesota Department of Commerce commissioner

Arnold’s agency runs the state's Energy Assistance Program, which distributes millions of federal dollars to local aid providers across the state to help customers with energy bills. That program was substantially expanded this year with the help of $106 million from the federal government for winter 2021-22.

As of Feb. 23, the Minnesota Energy Assistance Program received more than 118,000 applications, up from around 100,000 the year before and provided more than $101.2 million in benefits to households across Minnesota — nearly twice what it paid out the year before, per data from the state commerce department. It’s important to note, however, that the growth in program payouts is in part driven by expanded benefits for households. About 25,000 new households applied this year.

In addition to helping with bills, Minnesota's Energy Assistance Program also offers grants to help households repair and replace furnaces and make energy efficiency improvements to homes.

“That’s really important for the long term in reducing energy costs for people but also making people more resilient if there are changes in the price of the fuel that’s used,” Arnold said.

Find assistance

Those interested in applying for the Minnesota Energy Assistance Program can find more information online at https://mn.gov/energyassistance . Households can find a local assistance provider by calling 1-800-657-3710.

Follow Alex Derosier on Twitter @xanderosier or email aderosier@forumcomm.com.

Related Topics: MINNESOTAWINTERUTILITIES
Alex Derosier covers Minnesota breaking news and state government for Forum News Service.
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