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North Dakota regulators open investigation into natural gas price spike

Utility providers in North Dakota have said that their customers are likely to feel a price hit on their natural gas bills after February's cold snap caused demand for the commodity to skyrocket even as many supply channels were crippled because of frozen gas pipelines and wellheads in states like Texas and Oklahoma.

The new Bear Creek natural gas processing plant is pictured in mid-September near Killdeer. (Submitted Photo)
The Bear Creek natural gas processing plant near Killdeer, N.D. Special to The Forum
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BISMARCK — North Dakota utility regulators launched an investigation Wednesday, March 3, into the recent, dramatic spike in natural gas prices spurred by the extreme weather that compromised the power grid in many southern states last month.

Utility providers in North Dakota have said their customers are likely to feel a price hit on their natural gas bills after February's cold snap caused demand for the commodity to skyrocket even as many supply channels were crippled because of frozen gas pipelines and wellheads in states like Texas and Oklahoma.

Members of North Dakota's Public Service Commission said their information on the specifics of the added burden for customers is limited at this point, but Montana-Dakota Utilities, which provides natural gas for about 115,000 North Dakota customers, estimated an added cost of between $80 to $100 for its customers. Xcel Energy, which provides natural gas for about 60,000 North Dakotans, estimated last week that the added burden for its customers could range from $250 to $300 — all costs that the Public Service Commission hopes to spread over a longer period of time.

"Our job is to take a look at mitigating the impacts to the extent we can, from a balanced billing standpoint, and spreading those costs out so consumers aren't experiencing sticker shock on any particular bill," Commissioner Brian Kroshus said.

The three-member commission voted unanimously on Wednesday to open an investigation, which will look into the specifics of the added costs and develop a plan for spreading out the impact on North Dakota households. The regulatory panel will also aim to develop solutions to prevent similar problems in the future.

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"I don’t think it was anomalous,” Commissioner Julie Fedorchak said of the extreme weather that knocked out much of the natural gas supply in the southern U.S. "The grid has to be able to respond to this type of event."

The added costs come even as North Dakota's grid held strong during the frigid weather that blanketed much of the U.S. last month. While households in some parts of the state experienced controlled blackouts, the outages were brief and deployed to share power with southern states on the same power grid that were not equipped for the unusual weather.

And though North Dakota customers are feeling the hit of natural gas shortages in other parts of the country, Kroshus stressed that the state's participation in a larger power and natural gas network is still a net benefit.

"It's important that we are members of these larger systems, these larger networks, to push our product to others," he said. "The state benefits as a whole."

The impacts of the extreme weather event and natural gas infrastructure failures won't show up on North Dakota utility statements immediately, but commissioners noted that customers should prepare to see an unrelated higher cost on their February bills anyway. North Dakota experienced colder-than-normal temperatures itself last month, meaning that utility bills would have been higher even without the extraordinary circumstances in other parts of the country. For MDU customers, that will mean a 40% cost increase for average households over costs in normal temperatures, a company spokesperson said last week.

Separately, the Public Service Commission announced plans to bring power grid operators, regulators and other major stakeholders together for questioning on the root causes of the massive blackouts. That meeting is not scheduled yet, though commissioners said they would like to hold it in the late spring or early summer.

"This has to be a wake-up call,” said Kroshus, who warned that the outcomes of the grid failure could have been "catastrophic" if it had happened five or 10 years down the line, when there is likely to be less coal power online.

Moving forward, Kroshus said, the event begs two big questions about operations of the power grid.

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“Does the right regulatory framework currently exist?” he asked, and, "Are the right people in the room making these decisions?"

Readers can reach Forum News Service reporter Adam Willis, a Report for America corps member, at awillis@forumcomm.com.

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