NEW ULM — The New Ulm Public Utilities Commission has reduced February gas bills in New Ulm with a $2.6 million buy-down, and is giving customers an additional option to spread the payment out over five months.

The PUC held a special meeting Friday to develop a plan to mitigate and recapture February’s high natural gas prices.

The New Ulm Public Utilities (NUPU) warned of high natural gas prices because of the polar vortex that hit the country in February.

Cold weather typically results in a spike in gas prices, but the recent cold impacted the entire country, including Texas. The natural gas supply Minnesota receives from the southern states was effectively cut off as pipelines froze, driving up supply and demand.

The market price for gas at the beginning of February was $2.60/MCF but spiked to $188.32/MCF during the extreme cold.

In January, the NUPU gas bill was approximately $727,000. In February, the bill is estimated at $7.38 million.

The NUPU views this as a catastrophic financial blow to public utilities and utility customers.

“There are many municipal utilities, not only in Minnesota, but across other states, that have spent their entire fuel budget in four days of February,” NUPU Director Kris Manderfeld said.

Manderfeld said the exact impact on an individual’s gas bill will depend on that individual’s usage in February, but some customers could see bills triple from January payments.

As an example, Manderfeld showed the commissioners a table with the average billing for customers in January 2021. Residential customers using 237 ccf (237,000 cubic feet) of gas in January 2021 would have paid $178.24. The same customer using 237 ccf in February would see a bill of $818.82 because of the increase in natural gas prices.

A large commercial customer paying $543.88 in January would receive a $2,588.25 bill for the same gas usage. An industrial customer paying $17,054 in January would see a $97,152.66 bill in February without a change to gas usage.

The commissioners saw this increase to billing as unacceptable and discussed options to cut these high payments.

“Our customers have been hit with COVID, cold weather, and the Utility is aware of that and is compassionate toward that,” Manderfeld said.

She presented commissioners with three options to reduce the high bills. The three options were related to buying down the cost. The PUC would effectively pay a portion of these bills for customers using reserves.

Manderfeld explained NUPU had $1.3 million from the Hutchinson refund. By using this fund, the average residential customer would see an 18% decrease in their bill. The commission could use additional reserves to further buy down the natural gas bill. The commission reviewed a buy-down option of $2.3 million and an option for $2.6 million.

Commissioners preferred the $2.6 million buy down. This would decrease residential customers’ gas February gas consumption bills by 36%. This means if a residential customer was set to receive an $818 bill, the bill would be reduced to $519.

This $2.6 million is money customers will not have to pay. The money will be taken from utility savings.

Commissioner Sean Fingland made the motion to buy down customer gas consumption from February 2021 and March 2021 billing by $2.6 million with a second from commission Seth Visser. The motion unanimously passed.

Even with the $2.6 million buy down in customers’ billing, New Ulm gas customers are still looking at a significant increase on their next bill. The commission discussed options for spreading the payments out over the next five months.

This would allow a customer with a $519 bill from February to spread the payment out through July. In this example, the customer would pay $103.80 in March. Then in April, May, June and July, the customer would pay $103.80 on top of their regular bills.

Commissioners considered 10 months because it would further reduce the payments per month, but then customers would still be paying the bills next winter when usage was high again.

A five-month payment period allowed customers to pay off the February bill during the months where gas usage was lower because of less heating and less air conditioning use.

Commissioner Visser made the motion to allow an optional five-month contract to spread out February 2021 natural gas billing with a second from commissioner Shannon Hillesheim. The motion was unanimously approved.

The commissioners warned that customers would need to specifically request the five-month payment. Customers using automatic billing would be charged the entire February bill in March unless the customer calls to request the five-month contract.

Manderfeld said they encourage all customers facing financial hardship to call in and make the change.

“Don’t feel bad about coming in and asking for a contract,” Manderfeld said. “This is an unusual situation. It is not like you can’t pay your bill. This is a situation where you will have a higher cost on your bill.”

PUC President Linda Heine clarified this bill reduction and payback contract would be across the board for all NUPU gas customers. There would be not eligibility requirements.

The commissioner briefly discussed electrical billing. The cost of electrical utilities also saw an increase during the polar vortex but was not as significant as natural gas. To cover the cost of the electrical increase, the PUC might need to increase electrical rates, but the change to rates will be tabled until 2022.

At the end of the meeting, City Attorney Roger Hippert said there is a discussion among other municipal utilities about investigating how this gas spike happened.

Hippert said people are asking who benefited from this spike. The NUPU savings were depleted in four days without any improvements to service.

The commissioners agreed this natural gas crisis warranted further investigation and would be discussed at the next regular meeting Tuesday, March 23.