February's Cold Front Could Mean Higher Bills throughout 2021
February’s cold front didn’t just devastate Texas. People across the Midwest are facing steep energy bills after weeks of subzero temperatures, and their bills could remain high even as households use less gas.
Because of the unusually cold temperatures in February, market gas prices spiked just as people in the Midwest needed heat the most. MidAmerican Energy customers used 50% more gas than usual, but their bills for February won’t fully reflect that number.
That’s because the Midwestern states the energy company serves — Iowa, Illinois, and South Dakota — all have regulations that prevent energy companies from overcharging. State Purchase Gas Agreements require energy companies to estimate the price for natural gas every year. Since most households exceeded that price in February, MidAmerican Energy has to spread the full cost over several bills.
MidAmerican Energy spokesman Geoff Greenwood says the damage could have been worse.
“We have taken some… preemptive measures such as storing natural gas, and also locking in contracts before the market prices went up. That helped save our customers an additional $400 million.”
In Iowa, the expected annual increase for the average customer is $214. That’s not far off from Illinois’s number. It’s just a $4 difference across the river, but Iowa customers may see higher bills in the short-term; Illinois’s billing window closes in December, while Iowa’s closes in August.
MidAmerican Energy filed to extend that deadline last week. The company will be meeting with the Iowa Utilities Board next week to discuss other options.