Hibbing Public Utilities says shift from gas to biomass and coal saved about $1.5 million during polar-vortex event

Hibbing Public Utilities told its commission on Feb. 17 that a late-January polar-vortex event and a regional pipeline rupture sharply reduced gas supplies and pushed market prices for gas and wholesale power to historic levels.

"Starting right around the 23rd, you can see that huge spike up to $72 a dekatherm," Mr. Peterson said during the energy-market update, adding that wholesale power concurrently rose to roughly $800 per megawatt-hour. He said HPU shifted operations away from natural gas and burned biomass and coal during the peak, which "saved $1,500,000 just on gas prices alone, during that event."

Why it matters: Those market spikes have prompted other utilities to seek emergency rate actions to recover costs; HPU staff said the utility remained in line with its budget, reporting an overall average gas cost for January near $4.90 per dekatherm. Peterson credited plant operators and gas-portfolio staff — including the plant crew and the staff who manage gas purchases — for coordinating the switch and keeping units online during extreme cold.

Supporting detail: Peterson said the region had limited pipeline capacity after a pipeline rupture near Willow River and a 70% reduction at a regional compressor station, constraining supply as demand rose. Staff showed commissioners price charts demonstrating the magnitude of the spike and explained that HPU’s fuel flexibility (ability to burn biomass and coal) reduced the need to buy power or gas at peak market prices.

What comes next: Commissioners thanked staff for the operational response. Peterson said HPU will continue monitoring market volatility and that, unlike several other utilities, HPU will not be seeking emergency rate recovery tied to this event at this time.