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OPU proposes 31.9% gas rate hike for ‘23

OPU proposes 31.9% gas rate hike for ‘23
By
Joni Hubred, News Editor

With natural gas prices running two to three times higher than they were two years ago, Owatonna Public Utilities (OPU) customers are looking at a 31.9% rate hike in 2023.

It will add about $21 to the average residential customer’s monthly bill.

OPU general manager Roger Warehim told city council members last week that water and electric rates will increase as well, but not quite as much. Water, the “least expensive utility on most customer bills” will jump about 5%.

“It ends up being about a dollar a month,” Wareheim said.

Electric customers will see an average monthly increase of $12.79. Wholesale supplier SMMPA (Southern Minnesota Municipal Power Agency) increased rates by 15.6% as of November 1.

While OPU has some controllable costs–labor, for example–the vast majority of expense with natural gas and electric is noncontrollable costs, Wareheim said. The utility has no say in the wholesale price of natural gas, which has skyrocketed since January.

In an August OPU newsletter, Wareheim explained that while demand has increased, the natural gas supply “has not yet returned to pre-pandemic levels.” A rise in the price of gas in other parts of the world, he said, has led suppliers to export more, reducing domestic supplies.

Because natural gas is used to generate electricity, higher demand over the summer (with use of air conditioners) also affects demand.

Wareheim also noted increased costs in transporting gas across the interstate pipeline.

He told city officials that OPU’s reserves are strong, and the commission is planning a negative budget–a loss to offset the large increases for customers. Wareheim said the actual numbers when the budget is finalized “may look a little better.”

“Say I keep my house at 72 (degrees),” councilor Doug Voss said. “If I put my house at 68, will I come out even?”

“You’ll definitely save money,” Wareheim said. “If everybody did that, it would flatten the curve of natural gas use.”

Council vice president Kevin Raney asked about the “biggest culprit” in winter.

“The big thing is test for leaks,” Wareheim said, calling out door seals, attics, and insulation in walls. He said OPU offers an energy audit

To help customers through the bump in prices, OPU has doubled natural gas rebates from January 1, 2022, through March 31, 2031, in incentivize energy efficiency. The OPU commission met Monday to talk about the budget and will meet again on Nov. 22, 4 p.m.

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