Montana-Dakota Utilities customers who use natural gas to heat their homes could end up paying on average $170 more than usual this winter due to rising natural gas prices, according to a projection from the company.
Gas prices have increased globally in recent months, and the three members of the North Dakota Public Service Commission expect the trend will have a noticeable impact in the coming months on the heating bills of North Dakotans with gas furnaces.
"Consumers need to prepare," Commissioner Brian Kroshus said. "It's going to potentially be a tough heating season."
The U.S. Census Bureau estimates 40% of North Dakota homes have gas heat. MDU provides natural gas to about 115,000 customers in the state, including to homes in Bismarck and Mandan.
North Dakota utilities such as MDU cannot profit on the cost of gas itself. They pass the price they pay for gas through to customers, and that cost is reflected on households' monthly statements in addition to a service charge and the volume of gas used.
MDU says the gas supply has grown since 2020 but it has not met the demand, particularly from other countries seeking exports of liquefied natural gas from the United States. Drilling to bolster gas production has not kept pace with increased prices.
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That's playing out in natural gas-rich states such as Pennsylvania and Texas, and also in western North Dakota where gas is produced alongside oil in the Bakken. Oil prices are at a seven-year high, yet drilling is lagging for a number of reasons, including a shortage of frack crews, maintenance-related outages at processing plants and a focus by major producers on developing the Permian Basin of Texas and New Mexico.
MDU draws a significant amount of gas from an underground storage field in Baker, Montana, and from another site straddling the Montana-Wyoming border. Those sources account for about half the utility's gas needs in winter, MDU representatives told the PSC earlier this year.
Such a setup helps the utility mitigate higher prices, MDU spokesman Mark Hanson said. Much of MDU's gas supply is locked in at certain prices through contracts, but sometimes the company has to purchase gas on the daily market when demand soars.
The utility's projection that the typical customer will pay $170 more over the five-month heating season due to higher gas prices assumes that it will be an average winter.
"Stretches of colder than normal weather would drive up customer bills," Hanson said.
The National Weather Service's long-term forecast shows an equal chance of above-average and below-average temperatures over the next three months in North Dakota.
Meteorologists are keeping tabs on a La Nina watch issued by the weather service. If the climate pattern emerges this year, it could mean colder than normal temperatures for North Dakota, said Meteorologist James Telken with the weather service's Bismarck office.
Gas bills tend to increase significantly in winter as North Dakotans crank up their thermostats when temperatures plunge. High gas prices come on the heels of two other factors that could also drive up bills for MDU customers relative to last winter.
The PSC authorized an MDU gas rate increase in May to pay for replacing aging pipelines. The average MDU residential customer was expected to see a $4.21 per month bill increase as a result.
The utility also incurred a huge cost obtaining enough gas to meet demand when prices spiked during this past February's cold snap that plagued the central United States. It's spreading out that cost on customers' bills over the course of 16 months, with the typical household expected to pay another $4 to $5 per month during the period.
Others on the PSC also expressed concerns about the gas situation at a meeting last week.
Commissioner Randy Christmann said a rise in gas-fired power plants is competing with home heating needs. More gas-fired power is accompanying the shift toward wind and solar, as it can act as a backup to renewable sources when they are not producing electricity, he said.
"The prices are going to go up as we continue to shift toward these ... sources until we have good battery storage," he said.
North Dakotans seeking financial assistance with heating this winter have several options.
The state Department of Commerce has received more than $7.5 million in federal funding for weatherization and furnace and cooling repair programs. That's a 32% increase in funding from last year. The program contributed funding to more than 2,000 weatherization, heating and cooling jobs over the past year.
"Low-income homes spend a much higher percentage of their income on energy," Commerce Chief Operating Officer and Deputy Commissioner Shawn Kessel said in a statement. "Weatherizing and repairs to heating and cooling systems will allow saved dollars to be used for other necessities."
The program is available to homeowners and renters, including people who live in apartments. People must meet income-related criteria to qualify. Applications are available at www.ndwap.com.
North Dakotans who need help paying their winter heating bills can apply for assistance through the federal Low-Income Home Energy Assistance Program through May 31, 2022. The program is available for homeowners and renters, though people living in subsidized housing with heat included in their rent are ineligible.
The program provided about 12,800 North Dakota households over the past year with an average of $890.
Reach Amy R. Sisk at 701-250-8252 or email@example.com.