ST. PAUL — The Minnesota Senate passed a bill to ease mounting financial pressure on the state's municipally owned utilities Thursday, March 25 with support from both major political parties.
Senators pressed for the bill's approval as the utilities begin to grapple with the effects of the natural gas price spike stemming from February's nationwide cold wave. Its immediate future in the House is unclear.
Speaking to his colleagues on the Senate floor Thursday afternoon, Sen. David Senjem, the bill's author, described the legislation as the first step toward addressing issues presented by the wave.
"It's the beginning of the story, but it's an important beginning because our municipal utilities almost desperately need our help right now," he said.
In Minnesota as in other states, the demand for natural gas skyrocketed last month amid the extreme weather episode that affected most of the U.S. The price of the heat-and-power-generating resource surged in kind, and was driven even higher as the snow and cold knocked gas processing plants and distribution systems offline.
Though they managed to avoid the days-long blackouts that cities in Texas and across the South endured, Minnesota utilities still have hefty bills from their gas suppliers to contend with as a result of the weather. They are likely to pass on the costs to their customers in the form of hundreds of dollars in fees, broken up over many months.
Faced with $500 million in costs associated with the spike, CenterPoint Energy, the largest natural gas utility in Minnesota, may begin to assess such fees over a two-year period beginning in May, according to recent filings with state regulators. Other investor-owned utilities in the state, which together with CenterPoint serve approximately 1.6 million customers, will likely begin to collect them in September.
Some of the state's smaller, municipally owned utilities, which are regulated at the local level, have already begun to tack on the fees as their suppliers move to collect at least part of what they owe. What the lending program included in the bill passed Thursday could help to them to do, according to Minnesota Municipal Utilities Association Director of Government Relations Kent Sulem, is assess smaller fees over a longer period of time.
"The more certainty we can provide, the more likely we are to get better terms with our suppliers," Sulem said during a virtual committee hearing Thursday.
Senators unanimously approved the $15 million lending program by detaching it from the bill Senjem, R-Rochester, initially authored and grafting it as an amendment onto a separate piece of legislation, one that gives state-regulated utilities continued flexibility in how to recoup infrastructure repair costs. Borrowers would have to apply for the loans, which would be made out using money from the state's general fund, through Minnesota Department of Commerce.
The loans would carry no interest and have to be repaid within five years.
But citing the municipal utilities' urgent need to meet their obligations, the Senate set aside a related aid program targeting low-income households in Minnesota that Senjem included in the original bill, at least for the time being. Lawmakers have yet to agree on the source and amount of funding for that program, which is meant to help poorer Minnesotans with bills related to February's price spike.
Through a spokesperson, Rep. Jamie Long, author of the Minnesota House's companion to the Senjem bill and chair of the chamber's Climate and Energy Finance and Policy Committee, insinuated that the deletion of that program from the bill passed Thursday could hinder its progress. In a statement, he said the Senate "only solved half the problem by passing the loan program without the ratepayer relief."
"I'm hopeful that we can continue conversations with the Senate to address both needs, but today's vote takes what could have been an easy win with a bill that had passed overwhelmingly out of both energy committees and makes the path forward more challenging," Long, DFL-Minneapolis said.