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During February’s extreme cold and ice in Texas, home heating demand far outstripped energy supply. Consumers in variable-rate power plans, where rates change with the market price, saw such shocking energy bills that at least one Texas attorney advised people to disable automatic payments to their utility providers while seeking redress. But it’s not just Texas that pays the price when Hell freezes over: Rural residents in other areas who heat homes and businesses with natural gas may experience a related spike.
In Antigo, Wisconsin (population 7,780), a February 19 letter to customers of City Gas Company explained why. The utility has primary contracts for natural gas in the Texas and Oklahoma Panhandle areas. There, oil and gas production wells generally are not winterized sufficiently to withstand extreme and prolonged cold conditions like they experienced this year. So the supply literally froze up at a time when demand was great over a widespread area (we had -28°F here, not counting wind chill). “In the 30 years that I have been contracting for and buying gas – I’ve never seen anything like this,” said Gas Supply Manager, George Bornemann. “We stopped purchasing gas as soon as we could because we saw that prices could go even higher.”
When competition to buy natural gas increases dramatically because of extreme weather, utilities make hard decisions about how to meet demand. Colorado Public Radio reported that Xcel Energy asked their “interruptible” customers to curtail use to conserve energy for home heating while it was so dangerously cold. The Platte River Power Authority reduced the supply of natural gas available to produce electrical power to preserve the available supply for heating.
In Oklahoma and 13 other states served by power grid operator Southwest Power Pool, SPP executive Lanny Nickell said, “The same fuel that we need to provide you electricity is the same fuel that many of you are using to provide your home’s heat. The supply of gas is very constrained when these conditions collide, and that’s what happened.”
If only a situation involving supply and demand of energy commodities could be as simple as the left and the right seem to suggest. While they try to out-meme each other on Facebook, you might want to read this article by Abe Stanway, one of Forbes magazine’s 2020 energy sector picks for 30 Under 30. There’s a lot of food for thought there, starting with smart meters and the utility business model, and comparing and contrasting markets for energy and markets for corn or wheat in a way that makes sense to a farmer’s daughter.
Oddly, reading it brought to my mind the drought of the late 1980s, when kayakers knew their best bet for a decent water level to run the Red River near Gresham, Wisconsin, was at milking time. That’s when electrical demand peaked in the area. The small hydroelectric dam would release from dwindling reserves of water in the reservoir to generate energy to meet that demand.
Buried even deeper in my old memory vault, I pulled out this: At Purdue in the late 1970s, one of my professors was asked what he thought caused the biggest change in American society in his lifetime. It wasn’t war or mass production of automobiles. Instead, he said rural electrification, because it marked the first time many people had a monthly bill to pay that required cash.
In five or six generations, rural Americans have changed from people who stoked stoves into people who expect cheap, reliable power — whether from natural gas, liquid propane, electricity generated by gas, wind, solar, hydro, nuclear or methane gas from cow manure. And we’re willing to have the cost automatically deducted from our bank accounts. Usually.
In 2021, customers enrolled in “budget billing” plans might see less impact from the price spike related to February’s extreme weather than the folks who bet on variable rate pricing. People often choose budget billing where natural gas consumption is high during the winter heating season and low in summer (when demand increases for electricity for cooling). They pay a fixed monthly amount predicted by average usage and rates, although at “settlement time” they may have to pay more if their usage exceeded the estimate.
My husband and I are on a similar billing plan for the liquid propane we use as our primary heating fuel. A friend puts money in an envelope each week throughout the year to pay for filling their propane tank when the price traditionally is lowest — before farmers start to dry the corn harvest and before the home heating season begins.
Out on these country roads, propane is the most common option and natural gas is just a pipe dream. Natural gas pipeline was laid nearby a few years back. It was interesting to watch them install the line underneath the Wolf River. They branched off to the south just far enough to serve a small cluster of addresses. We were disappointed but not surprised when the line stopped short of our place for the same reason we struggle to get reliable high-speed internet: Too few addresses to make it profitable.
But if it had, we would have switched from propane to natural gas. Would we also have been tempted to choose a variable rate plan for even greater savings — at least until some extreme weather event upset the balance of supply and demand? I can understand why others might, but probably not us.
Because I have not forgotten my dad bringing baby pigs into the bathroom of our farmhouse to keep them warm – to keep them alive – during a spell of extreme cold. As I recall, my mother’s reaction to pigs in the house was pretty extreme, too. Extremes are hard, and expensive, but entirely expected.
Ensuring cheap, reliable energy for consumers during inevitable future extremes won’t be easy. But maybe it could be a tiny bit less impossible if we could have hard but civil conversations about climate change and dwindling petroleum resources, and the benefits and shortcomings of energy alternatives.
Donna Kallner writes from rural northern Wisconsin.