EAU CLAIRE — Soaring natural gas prices after a long cold spell that struck the Midwest and South could trickle down to the heating bills of Chippewa Valley residents.
The deep freeze created a surge in demand for natural gas for heating homes and producing electricity.
“The extreme cold drove up demand for natural gas and likely will result in some short-term increase in price,” said Brian Elwood, general manager of customer and community services for Xcel Energy in Wisconsin and Michigan.
However, Elwood said Tuesday it’s too soon to predict the degree of impact from natural gas price spikes reported to be at least 100 times the typical purchase price in some places.
“What (Wisconsin) customers will see will be nothing like what people are seeing in Texas,” he assured.
The utility will be working with state regulators on ways to mitigate the impact on customers, including the possibility of spreading out the impact of higher costs over time on consumers’ bills, Elwood said. He noted that Xcel passes along its costs for the commodity to customers with no markup.
Xcel also follows natural gas hedging policies to help reduce the short-term impact of price surges such as the one currently roiling energy markets, he added.
Elwood urged customers who are concerned about their energy bill or having difficulty paying their bill to call the company to discuss possible payment arrangements or other programs that might help.
Wisconsin residential propane prices also have risen sharply, reaching $1.88 per gallon in mid-February — their highest level since 2014, according to the U.S. Energy Information Administration.
That price was up 10 cents from a week earlier and 40 cents from the first week in January, and thus could result in a steep price increase for Chippewa Valley consumers needing to refill their propane tanks who didn’t prepay before the heating season.
Calls to several local propane suppliers seeking comment about how that spike might affect customers’ heating costs were not returned Tuesday.
Minnesota Sen. Tina Smith has called for federal investigations into possible price gouging in the Midwest after natural gas spot prices spiked as high as 100 times typical levels, forcing utilities and other natural gas users to incur exorbitant costs, many of which were passed on to customers.
In a letter sent Saturday to federal regulators, Smith said the price spikes will not just harm consumers, but 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.” The letter was sent to the Energy Department, Federal Energy Regulatory Commission and the Commodities Futures Trading Commission.
The extreme weather spurred residents from Mississippi to Minnesota to crank up electric heaters and pushed demand for electricity beyond the worst-case scenarios planned for by grid operators. At the same time, many gas-fired power plants in Texas and other states were knocked offline because of icy conditions, and some plants appeared to suffer fuel shortages as natural gas demand spiked nationwide.
More than 70 deaths across the U.S. have been blamed on the storms.
While officials don’t know all the details of what happened or how it will affect utility rates, Smith said, “we do know this situation could be a significant financial burden for utilities and their customers,” especially as families in Minnesota and across the country struggle in the coronavirus pandemic and economic downturn.
The American Gas Association, which represents more than 200 local energy companies, reported that Feb. 14 and 15 set a record for the largest natural gas demand in U.S. history over a two-day period.
The Associated Press contributed to this story.