HPU shields Hibbing customers from Winter Storm Fern price spikes

Hibbing Public Utilities reduced its natural gas consumption by more than 2,000 dekatherms per day during the late‑January Winter Storm Fern, and HPU officials said that fuel switching and contract protections allowed the utility to avoid an estimated $1.5 million in added costs while keeping electric and steam service reliable. The cold snap ran January 23—27 across a vast stretch of the United States and produced extreme market volatility that threatened higher bills for customers elsewhere.

“During the storm, natural gas prices surged from typical levels of about $3.50 per dekatherm to more than $70, while electricity prices climbed from roughly $40 per megawatt-hour to more than $800, according to HPU.” Those price moves occurred amid record demand for heating and power and would have translated into large wholesale purchases for utilities with heavy gas exposure.

HPU pointed to constrained supplies as a key driver of the spikes. “The spikes were driven by record demand caused by extreme cold, combined with constrained natural gas supplies stemming from reduced domestic production and the regional effects of the Willow River pipeline rupture,” the utility said, citing both production declines and pipeline impacts in the region.

The utility’s natural gas supplier, Northern Natural Gas, issued a force majeure during the event. “Northern Natural Gas … issued a force majeure, a contractual provision that can suspend delivery and pricing obligations during extraordinary events,” the reporting notes, complicating supply for customers and suppliers across the pipeline network that serves northeastern Minnesota.

HPU credited a mix of planning, hedging and fuel flexibility centered on the Hibbing Renewable Energy Center for shielding ratepayers. “HPU officials said local ratepayers will be spared those impacts due to advance planning, risk mitigation in gas supply contracts and fuel flexibility at the Hibbing Renewable Energy Center.” The plant shifted generation away from natural gas to biomass, waste wood and coal, and “By shifting generation away from natural gas and toward biomass waste wood and coal, HPU reduced its natural gas use by more than 2,000 dekatherms per day during the cold weather,” HPU said.

“That approach allowed the utility to maintain reliable electric and steam service while avoiding an estimated $1.5 million in costs over the duration of the event, HPU said.” The utility’s public stance contrasts with broader expectations that “many utilities across Minnesota and the nation are expected to pass on higher costs to customers through increased Purchased Gas Adjustment fees.”

The reporting does not include HPU’s detailed methodology for the $1.5 million estimate or the full text and effective dates of Northern Natural Gas’ force majeure notice, and those items remain available for follow up. HIBBING—Hibbing Public Utilities customers will not see higher energy bills following Winter Storm Fern, despite extreme volatility in national natural gas and electricity markets during the late‑January cold snap.