February's polar blast may hit Iowa gas bills for years

Donnelle Eller
Des Moines Register

Thousands of Iowans could be paying for last month’s Arctic blast for months, possibly years, as the state’s largest utilities seek permission to stretch out millions of dollars in added costs to reduce the hit to consumers.

The Iowa Utilities Board heard proposals Friday in a hearing with the investor-owned utilities that serve Iowans, including Des Moines-based MidAmerican Energy, Alliant Energy, Black Hills Energy and Liberty Utilities.

February brought extended subzero temperatures to Iowa and a wintry blast to much of the rest of the U.S., including states to the south that rarely see such conditions.

The low temperatures drove natural gas demand to record highs, while at the same time, many natural gas wells in Texas and Oklahoma froze, limiting supplies and sending prices skyrocketing.

Typically, Iowa utilities have through August to recover from their ratepayers the increased costs to heat and power homes and businesses during the winter. But some of the companies on Friday suggested a much longer timeline.

Bob Amdor of South Dakota-based Black Hills Energy, which serves 130,000 Iowa customers, said the utility spent about $100 million more than anticipated for natural gas in Iowa. Residential consumers will bear the bulk of the increased costs, at $61 million.

Amdor said Black Hills would like to keep the average annual increase for customers to 10% to 15%, requiring that the expense be spread over two years. It’s open to recouping the costs over as long as five years, he added.

Alliant Energy’s Mayuri Farlinger didn’t outline the total increase in costs the utility experienced in Iowa, but said the Wisconsin utility estimated that Iowa residential customers would pay an average of $7 more a month and businesses $41 more each month if the period for recovering costs is extended through December.

MidAmerican Energy’s Amanda Hosch said the utility set out four scenarios. An early estimate, based on recouping its costs through December, would have Iowa families paying $13 to $18 more a month.

On Friday, the company proposed consumers repay costs over a year, beginning in April. “We think this plan strikes the right balance between recovering the costs” and not overburdening customers, Hosch said.

Owned by Warren Buffett’s Berkshire Hathaway, MidAmerican plans to use internal and external financing to cover the costs. Hosch said she anticipated the total cost for the freeze would be made public, although it was not released Friday.

Liberty Utilities’ Greg Tillman said his company estimates costs for February’s freeze will rise by $1.3 million. He said it may not sound like a lot compared to Black Hills’ costs, but it is far greater than the $160,000 anticipated.

Tillman said he expected residential customers would see bills average $3.25 more a month over three years, while commercial customers would pay an average of $6.75 more each month.

He said he believed it would be difficult for utilities to prepare for such a “highly unusual event.”

“We’ve never seen this kind of pricing. It never would have been planned for,” he said.

Chair Geri Huser said the board would collect more information, including meeting with the utilities, before issuing orders that outline how long the companies can take to recover their costs.

Rime ice coats tree branches and plants at the Dale Maffitt Reservoir on Feb. 3, 2021, near Cumming. The frost is caused by fog freezing on a surface.