Minnesota natural gas bills should be lower this winter

Minnesotans who heat with natural gas may feel less strain on the budget this winter.

Customers of CenterPoint Energy, the state's largest gas utility, can expect small refunds on their December natural gas bills and slightly lower rates compared with last winter, when an interim hike took effect just as record cold sent heat bills soaring.

Utilities, meteorological services and the federal government also are predicting that this winter won't be quite as bad as it was in 2013-14. It produced extended cold and a new phrase to describe it: a polar vortex.

CenterPoint, which serves 823,000 Minnesota homes and businesses, said last year's was the coldest winter in 60 years. Record demand triggered natural gas price spikes and forced utilities to curtail some industrial customers. Over a dicey weekend in January, Xcel Energy asked its 441,000 Minnesota gas customers to set thermostats at 60 degrees because a pipeline rupture threatened supplies.

"We are not seeing a polar vortex," said Brian Milne, energy editor for Schneider Electric, whose Minneapolis-based meteorology unit issued its winter outlook on Thursday. "I don't think we are going to see a repeat of last year."

Schneider's outlook for the Upper Midwest is a few degrees colder than normal, but, he said, "temperatures should not be as extremely cold as last year and as persistently cold." Milne said cold spikes could drive up prices on the natural gas market, but probably not as dramatically as last year.

CenterPoint and Xcel Energy, the state's second-largest gas company, also aren't expecting as much cold weather. Michael Boughner, director of gas supply for Xcel Energy, said the company forecasts a 15 to 16 percent overall decrease in natural gas usage this winter.

Will Phillips, state director of AARP Minnesota, said a nearer-to-normal winter and the scaled-back rate hike would help poor and older customers who live on Social Security. They often spend a large percentage of their income on heating bills, he said.

"It is still a real serious challenge," Phillips said.

Customers' bills feature separate line items for the price of gas and the costs of delivering it. The ups and downs of gas prices are passed on to consumers with no gain to the utility. But delivery costs are regulated by the state Public Utilities Commission (PUC), and the rate includes an authorized level of profit.

Under CenterPoint's new gas-delivery rate, finalized by the commission on Thursday, residential customers can expect an average refund of $11 on their December bills, said company spokeswoman Rebecca Virden. Interim rates are imposed when utilities seek permanent rate hikes, but by law any excess must be refunded with interest.

Going forward, the new rate is less than customers currently pay, but $2 to $3 per month more than CenterPoint charged before October 2013, when the interim rate took effect. Much of the increase is in the basic charge, which customers pay regardless of gas usage. It's going from $8 to $9.50 per month.

At Xcel Energy, customers could see a 3.4 percent increase in their bills in January as the utility seeks to recoup its enhanced 2015 investment in pipeline-safety upgrades. The PUC has not yet acted on that request.

Boughner, Xcel's gas supply director, said natural gas is selling at about where it was going into last winter before unprecedented price spikes. Gas storage has increased, helping to stabilize the gas market, and Xcel's underground and liquefied natural gas storage is at 100 percent, he said.

To deal with another rupture that affected deliveries on the Viking Gas Transmission Co. pipeline last January, Xcel worked with the owner, Oneok Partners, to upgrade it to operate in either direction. The line normally carries gas from Canada into Minnesota and Wisconsin.

Boughner said the reversal, completed Nov. 1, allows it to be turned around in the event of an accident in order to bring gas from Chicago to Minnesota.

"It gives us enhanced reliability," he said.