Natural gas prices in some areas of the country ballooned to the thousands while 4 million residents in Texas were left in the cold and dark during a prolonged, unparalleled Arctic freeze last week.
The impact of last week’s weather crisis in Texas rippled all the way up to southern Minnesota.
According to Owatonna Public Utilities General Manager Roger Warehime, the historic freeze fueled monstrous weekly natural gas prices for the municipal utilities provider because the natural gas wells froze and were unable to send gas through the Northern Natural Gas pipeline used in most of southern Minnesota.
“On top of that, the demand in Texas and that whole area was increased because people were trying to heat their homes with natural gas and trying to generate electricity,” Warehime said. “All of that made supply relative to demand short for a period of time and while we have plenty of natural gas in general, we couldn’t get it out of the ground and flowing up to our area for that whole week.”
Now the OPU Commission has to grapple with how to handle that jump in natural gas prices for customers.
While municipal utilities such as OPU can adjust their customers’ bills through commissions, Warehime said he is unsure how this will impact customers who go through retail utility providers such as Xcel Energy. For those companies, Warehime explained that they buy the natural gas directly off the market and sell through the utility to the customer. While an increase in bills can be expected for these customers, however unfortunate, Warehime said he is certain no company could have anticipated this result from their market exposure.
Demand for natural gas and electricity increased during the extreme cold last week, which resulted in a “dramatic” short-term increase in prices throughout the country, according to Xcel Energy. While Xcel Energy has policies in place to hedge natural gas prices to reduce the impact of price surges, the company isn’t immune from extraordinary spikes in cost that have occurred in February. Xcel Energy doesn’t profit on fuel costs for heating or producing electricity and the cost is passed directly to customers and customer will likely have a noticeable impact on customers’ natural gas heating bills, but minimal impacts to electric customer bills.
“While we expect there to be impacts due to the high natural gas prices during the cold snap, we’ll work with our regulators and stakeholders to minimize the effects of those prices on our customers,” Xcel Energy said in a statement.
The Minnesota Public Utilities Commission has called a special meeting for Tuesday to discuss the cause of the spike in natural gas prices. U.S. Sen. Tina Smith has also called for an investigation into the natural gas prices spike. The spike could “threaten the financial stability of some utilities that do not have sufficient cash reserves to cover their short-term costs in this extraordinary event,” Smith wrote in a letter to the Energy Department, Federal Energy Regulatory Commission and the Commodities Futures Trading Commission.
Though prices have since gone back to normal, Warehime said the surge in natural gas prices at the beginning of last week resulted in OPU issuing its first ever peak alert to their customers, pleading that they help reduce their natural gas consumption as much as possible. For every 1 degree the thermostat is turned down, the homeowner is saving up to 3% on their heating bill, OPU explained in its Feb. 15 alert.
“We have never done a peak alert before,” Warehime said.
At the end of the peak alert, which last through Thursday night, Warehime said there was a 3.5% overall decrease in OPU’s load from its 10,600 natural gas customers in the Owatonna area.
“That saved us about $200,000 a day,” Warehime said.
Though the reduction in use helped with the immediate problem at hand, Warehime said there is still the long-term obstacle of how to pay for the natural gas that was used throughout the mini polar vortex experienced this month. OPU spent $1 million on natural gas for the month of January. During the peak alert, OPU was spending $2 million a day on the same resource. Warehime said they anticipate they will close the month of February with having spent $10 million on natural gas.
“OPU does hedge 60% of our anticipated gas purchases by purchasing gas ahead of time, only a portion of our needs are open to the market,” Warehime said. “If we did not have our hedged positions, this would have been even worse.”
The next step
The next step for OPU is handling the bills, something Warehime said the OPU Commission is planning to discuss during its meeting on Tuesday afternoon. Because of the ongoing COVID-19 pandemic and the vulnerable situation it has created for numerous individuals, many of which have seen a change in their financial security as a result of a job change or loss, Warehime said it is important to OPU that they do not put the entire price tag on the customers – at least not all at once.
“We live in this community,” Warehime said. “We care about the citizens and we want to do what works for them, especially since we know firsthand how hard of a year it has been.”
The main option currently on the table is to stretch the increase in the natural gas prices out over several months, Warehime said. If the February bill reflected the entire increase in prices, Warehime said it would be comparable to a typical $125 bill jumping up to $1,000.
While municipal utilities such as OPU are able to adjust there bills through their commission decisions, Warehime said he is unsure of how this will impact customers who go through retail utility providers such as Xcel Energy. For those companies, Warehime explained they buy the natural gas directly off the market and sell through the utility to the customer. While an increase in bills can be expected for these customers, however unfortunate, Warehime said he is certain no company could have anticipated this result from their market exposure.
The last time Warehime said there was a drastic increase in natural gas prices was in December 2017 when much of the Midwest was rocked by a polar vortex. At that time, however, Warehime said prices were hitting up to $100 and eventually closed at $70.
“Compared to this time around, the prices were trading at $600 and closed at $235,” Warehime said. “This is just orders of magnitude greater than the polar vortex, which had been the worst we had ever seen previously. But this is so much more.”
The Associated Press contributed to this report.
Beavers are reportedly causing backups in some Rice County ditches, leaving ditch owners with expensive repairs and county officials grappling with how to fix the problem.
The latest option the Rice County Board of Commissioners could consider includes a per animal bounties to remove them from the drainage systems in Rice County, an initiative undertaken in some other counties throughout Minnesota. Le Sueur County enacted a beaver bounty in 2018 after the animals caused trouble on Lake Washington, building dams that were backing up Shanaska Creek in the eastern portion of the county. A bounty system is not currently in place in either Steele or Waseca counties.
Waseca Soil and Water Conservation District Technician Tyler Polster said his county doesn’t have plans to implement such a bounty system, adding that beavers have not proven to be a substantial problem in ditches in that portion of southeastern Minnesota.
Steve Pahs, Rice Soil and Water Conservation District district manager, told the county’s Ditch and Highway Committee last week that there has been an upswing in beavers in the area. While giving the annual ditch inspector’s report, Pahs said a beaver dam had caused issues on a public ditch near Little Chicago in Webster Township. Pahs referred the idea to the county board for discussion.
To Pahs, a bounty system could motivate trappers to remove the beavers and dams from the area. Currently, trappers are seen as unmotivated because of low fur prices. Pahs, who has worked for Rice County for 13 years, has noticed beaver dams in a couple sites per year.
Pahs said not removing the beavers from ditches can prove detrimental to the system by inhibiting the water flow. That restriction raises water levels, causing backups and drainage outlets to be submerged. Fixing the backups can prove expensive: Pahs said it can cost up to $1,000 to have a contractor come in and remove a beaver dam.
According to the Minnesota Department of Natural Resources, “Wherever they have become too numerous, they cause problems for people. Their dams flood farmlands, roads and timber, and their penchant for chewing wood has resulted in the loss of valuable fruit and shade trees.”
Pahs emphasized that he is not advocating for complete eradication of beavers. Instead, he said they should be allowed to flourish in natural settings as they provide flood control benefits in unaltered streams.
Under state law, local road authorities or governments can, after consultation with the Fish and Wildlife Division, implement a beaver control program designed to reduce the number of beavers if the population is interfering with or damaging a public road, or causing damage to drainage ditches on public property.
Rice County Commissioner Jeff Docken said the county will continue to monitor the situation to determine whether a bounty system is needed. He noted commissioners have not developed a decision timeline but could wait another year to see how the problem evolves, adding that if beavers continue to plague some private ditches, he would support implementing a bounty system. Fellow Rice County Commissioner Steve Underdahl said he needs “a little more information” before making a decision.
This is hardly a new situation in the region. An October 2011 News article noted beavers at that time were also creating problems by damming up storm drains on both the southeast and north sides of Northfield.
Owatonna High School student Fardouza Farah is one of two Minnesotan students selected to represent the state at this year’s U.S. Senate Youth Program (USSYP).
Each year two of the highest-achieving students from each state, the District of Columbia and the Department of Defense Education system overseas are chosen through a competitive merit-based process at state departments of education across the nation. USSYP is an educational opportunity, created by a 1962 U.S. Senate Resolution, for exceptional high school students interested in pursuing a career in public service.
It’s a week-long program where students learn about the U.S. Senate, Farah said. Farah applied to the program in December, submitting a couple of essays and recommendations. She was selected as a finalist, asked to do an interview and found out she had been chosen to represent the state earlier in February.
“I was kind of surprised because they do only pick two people from each state. So I didn’t really expect it, but I was grateful and honored and very excited,” Farah said.
Farah will join Red Wing student Alainn Hanson and U.S. Sens. Amy Klobuchar and Tina Smith in representing the state virtually this year from March 14 to 17. Farah and Hanson were able to meet personally with the two Minnesota senators, according to Farah. The first ever virtual Washington Week has been designed to be interactive with educational webinars and leadership forum opportunities for student delegates, according to a press release.
Participants will learn about the branches of government, what it means to be an elected official and the importance of making democratic decisions on behalf of the public. Student delegates will attend online meetings and briefings with senators, the president, a justice of the Supreme Court and governmental officials.
In addition to the professional development opportunities, Farah will also receive a $10,000 college scholarship to continue her undergraduate education, provided by the Hearst Foundations to encourage continued coursework in public service.
Selected delegates rank academically in the top 1% of their states among high school juniors and seniors. USSYP alumni include U.S. Sen. Susan Collins, Transportation Secretary and former South Bend Mayor Pete Buttigieg, former U.S. Sen. Cory Gardner and former New Jersey Gov. Chris Christie among other top officials.
Currently delegates have an online community established where the students get to meet fellow student delegates.
“I was really looking forward to meeting the other delegates, which I’ve already met them, but I’m looking forward to that network of getting to know people who have the same goals and ideas as me and it’s been fun getting to know them so far,” Farah said.
Farah, a junior at Owatonna High School is highly involved in her school, participating in Student Council, National Honor Society, speech, mock trial, Owatonna Green Team, LINK Crew and the Junior Class representative, but her impressive resume doesn’t end there.
“I’m on the National Justice Education Project, which is a nonprofit that is centered around systemic racism and trying to raise awareness on mass incarceration,” Farah said.
She has helped tutor students in Kyrgyzstan, providing free English lessons. She is the chapter president of Minnesota Youth Against Sexual Violence, working with fellow Minnesota students to increase awareness about sexual violence and provide support to sexual assault survivors. Locally she has organized the Owatonna Youth Against Sexual Violence group in an effort to help Minnesota survivors. She has also co-founded a nonprofit organization, FL Tutoring Services, which provides tutoring to low-income students and underrepresented students across the state via free virtual tutoring, according to a news release.
Farah said she is interested in holding some sort of elected office in the future. Whether that’s at a local or national level, she hasn’t decided yet.
“I do think that legislators kind of have the most power in this country in making changes,” Farah said adding that she wants to be an advocate and leader for positive change.