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Energy policies add to supply, demand issues

ND consumers face higher heating bills

Submitted Photo Congressman Kelly Armstrong speaks at a news conference in Washington, D.C., Tuesday on rising energy bills.

Minot residents can expect their heating costs to be higher this winter.

Montana-Dakota Utilities, which provides natural gas to Minot, projects natural gas prices for the 2021-22 winter heating season will be up 52% across its service area in the Dakotas, Montana and Wyoming, although the degree of change differs slightly by state. In North Dakota, it means the average residential customer is estimated to pay $185 more than last year for the five-month heating season from November through March.

Xcel Energy, which provides natural gas to some eastern North Dakota communitiesj also estimates its average North Dakota residential customer will pay an increased fuel cost of about $164 over the course of the winter, not including any fuel cost adjustment sought for the spike in natural gas prices during winter storms and cold in February 2021.

The main reason for higher natural gas prices not only nationally but globally is that supply hasn’t kept up with demand, according to MDU and Xcel. The biggest increase in demand growth from 2020 is from liquified natural gas exports, and despite natural gas prices increasing in 2021, drilling nationwide hasn’t grown. The amount of natural gas in storage also is below the five-year average, MDU reported.

The propane price follows the natural gas price but hasn’t seen the same degree of spike, said Mike Rud, president of the North Dakota Petroleum Marketers Association.

“On the propane side, we are up a little bit from years past. At this point, it’s kind of a wait-and-see approach as to what prices might do,” he said. “Inventory was off about 25% from last year, but we have caught up quite a bit now so, hopefully, as we move into the first round of cold weather in the next few weeks, we will be able to hang in there.”

As with natural gas, significant propane exports have been a factor in pricing. However, fall grain drying that typically drives prices higher hasn’t been an issue during this drought year, Rud said.

Congressman Kelly Armstrong, R-ND, said consumers can expect another 15% increase in heating costs if Congress approves a $3.5 trillion reconciliation package that includes a methane tax and the Clean Electricity Performance Program promoted by President Biden. The CEPP provides grants to electricity suppliers that increase their clean electricity production by at least 4% over the previous year. Suppliers that fail to hit the target will be penalized $40 for every megawatt missed.

Armstrong participated in a news conference and roundtable held by House Republican leaders Tuesday regarding the reconciliation package.

“North Dakota is an energy powerhouse. We’ve got notice from our two utilities that people are going to pay upwards of $150 to $200 more for their energy costs this winter. When you say you’re not taxing anybody who makes under $400,000, people who are paying $200 more to heat their home in North Dakota in the winter will disagree with you,” Armstrong said. “This is bad for consumers. It’s bad for domestic energy producers, and it’s bad for American workers. We are creating a policy that makes energy more expensive and puts us in a bad competition space on the world stage.”

The American Exploration & Production Council provided information at the roundtable indicating a new tax on natural gas will cost consumers $9 billion and eliminate 90,000 jobs.

Armstrong said the nation cannot move toward the administration’s climate goals in the time in which Democrats say.

“My concern isn’t that they succeed because they can’t succeed. My concern is that they fail. And when they fail, consumers are going to pay more for energy; American companies and American workers are going to suffer. That’s exactly what’s going to happen as this moves forward. We need to talk about it, and we need to be honest with the American people about it because their costs are going up, whether it’s at the pump or it’s to heat their house or to feed their families,” Armstrong said.

MDU and Xcel stated their cost of natural gas is a straight pass-through to customers, with no profit margin added.

The companies’ purchase strategies are designed to mitigate big swings in natural gas prices.

MDU uses a pair of underground natural gas storage facilities to hold about a third of its winter needs. That natural gas is bought at lower prices over the summer. The company has about 25% of its needs on fixed contracts, also at a lower price. It uses more than 20 suppliers to buy the remainder of its natural gas from the market, which also helps limit its exposure to the more volatile day market, the company reported.

Xcel also uses storage and financial hedges to manage costs.

MDU offers customers balanced billing to stabilize payments over the course of the winter and offers other tips for saving energy under the “energy efficiency” tab on its website at montana-dakota.com.

Xcel, which provides electricity in the Minot market, stated the company will work with customers to provide payment plan options and energy assistance to get them through difficult times. More information is available at 800-895-4999 or on its website at https://nd.my.xcelenergy.com/s/billing-payment/energy-assistance.

The Xcel website also includes tips, incentives and rebates to help customers save energy and money.

Rud anticipates greater demand this winter on the federal emergency heating assistance program.

“We urge anybody who is in that predicament to certainly take advantage of that program,” he said.

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