The extreme weather that gripped the Midwest the week of Feb.15 resulted in temperatures that were far below normal. Record energy demand throughout the Midwest during this time caused natural gas prices to spike.
NorthWestern Energy and other South Dakota energy companies worked with the South Dakota Public Utilities Commission to address the impact on South Dakotans’ natural gas bills.
Beginning in March, the higher cost of natural gas purchased during the energy emergency will apply over the next 12 months to customer bills. Customers will see the increase reflected within the item on their bill labeled “Purchase Gas Commodity.” NorthWestern Energy’s rate to deliver natural gas to customers is unchanged.
We encourage anyone concerned about their ability to pay a higher energy bill to contact NorthWestern Energy’s customer service department.
Why did the weather impact natural gas prices?
Natural gas is a commodity purchased from a competitive market. NorthWestern Energy uses historical use data and forecasts to purchase natural gas when prices are low for use by our customers when prices and demand are higher.
In mid-February extreme temperatures throughout the entire Midwest caused historical demand for energy. Freezing temperatures were recorded from Texas to Canada. Much of the natural gas that serves the Midwest is produced in Texas, Wyoming, and North Dakota. The extreme temperatures caused production losses in these states. As a result of the loss of supply and unprecedented demand, natural gas prices were at record highs. NorthWestern Energy used the previously procured natural gas and storage withdrawals, however, in order to meet the extraordinary demand, additional purchases for our customers were made at very high prices.
NorthWestern Energy’s natural gas procurement plan has performed well historically, limiting the market exposure of our customers when prices are high. NorthWestern Energy’s South Dakota natural gas customers’ average monthly bill is 33% lower than the national average.
What about electric bills?
NorthWestern Energy also serves electric customers in South Dakota and many customers receive both electric and natural gas service from us.
NorthWestern Energy’s generation assets produced energy to meet most of our customers’ demands, which helped insulate our customers from the full effect of the high prices of electric energy on the market in February. However, we did have to purchase some electricity from the market, and our generation cost was much higher than usual due to extremely high fuel prices. These factors, along with high customer demand due to the cold temperatures, will likely result in higher energy bills.
South Dakotans did their part to help
NorthWestern Energy again thanks our South Dakota customers, who responded immediately when asked to conserve energy during the emergency. NorthWestern Energy is proud to be a member of the communities we serve in South Dakota, where we provide safe, reliable and affordable energy.