On Feb. 6, when temperatures hit 23 below zero, both Montana State University Billings and MetraPark felt the bite of their gas bill.
MetraPark was hit with an $8,000 one-day emergency gas charge to keep the temperatures from plummeting inside its three main buildings.
“It’s scary to think what can happen when it’s 20-plus below zero,” said MetraPark operations director Jeff Seward. “In just two hours, our inside temperatures dropped 20 degrees.”
At issue are the institutions’ “interruptible” natural gas contracts.
Large energy customers that can afford their own propane backup systems can save money by allowing their natural gas supply to be interrupted when demand peaks.
That’s what happened to more than two dozen large area customers during the last cold snap.
Most customers apparently got through it just fine with their backup systems. But, both MetraPark and MSUB had to go to Plan C when their propane systems balked.
During those numbingly cold days, MDU Resources Group needed all of its pipeline capacity to serve its regular customers. That meant that third-party natural gas providers like Rainbow Gas Co., had to warn their “interruptible” customers their service could be temporarily cut off.
MDU has nine “interruptible” customers in Billings, according to spokesman Mark Hanson in Bismarck, N.D., where the utilities company is based.
“We didn’t cut off any of our customers, but we were too close to our maximum capacity on our transmission pipeline, so we had no excess natural gas for other companies,” he said.
Another 18 large Billings businesses, including MetraPark and MSUB, have “interruptible” contracts with third-party providers like Rainbow, which gets a discount by buying in bulk from MDU. It isn’t clear how many of those 18 businesses were shut off during that cold spell in February.
MSUB had to cancel classes for a day while it nursed its fussy propane backup system. MetraPark’s propane system caused so much trouble, the county-run facility was forced to pay MDU’s huge emergency rate to keep the natural gas flowing.
With an “interruptible” contract, “you’re not guaranteed space on the pipeline,” MDU’s Hanson said, explaining the high surcharge.
This is the first time in a decade that MetraPark’s backup system failed and it may spark a review by the county of the value of an “interruptible” contract.
On Feb. 3, Rainbow warned MetraPark it would cut off its gas service the following day at 8 a.m.
“They said they would have no gas available for the Billings region and not just for us,” MetraPark’s Seward said.
Despite regular maintenance and tests, MetraPark’s propane system wasn’t working well enough during the bitter cold to keep the its facilities from freezing. By Feb. 7, facing the possibility of burst pipes, water damage and canceled events, the county asked MDU to keep the gas flowing.
“They said, yes, but it’s $8,000 a day,” said Yellowstone County Finance Director Scott Turner.
That single day nearly equaled MetraPark’s December bill of $8,700.
Seward discovered later that some water had frozen over a sensor on the backup heating system that tells the propane flame when to burn.
Like MetraPark, MSUB had similar troubles with its propane system, but dodged a big emergency bill.
The university’s backup system worked, but needed constant monitoring. Maintenance workers logged 30 hours straight manually operating the propane system. When a part was replaced during a separate power surge, some circuitry may have been damaged — a problem that facilities services director Jason McGimpsey is still tracking down.
To avoid paying the emergency gas rate, administrators closed the main campus on Feb. 6 and reopened the next day.
To add to the fuel shortages that frigid week, at least one Billings-area refinery had production problems and was producing less propane, McGimpsey said.
“We had to keep the buildings from freezing and causing significant damage,” he said.
Under a State of Montana contract, the university was able to buy 5,000 gallons of propane in Helena to fill its tank and avoid paying the peak rates of up to $5 per gallon, he said.
“We still paid a flat rate of $1.79 per gallon,” McGimpsey said.
By trucking in fuel, the campus left more propane for other Billings businesses, including nursing homes, he said.
MSUB’s natural gas bill shouldn’t be that much higher when it arrives at the end of the month, McGimpsey said, but the cold snap still leaves its mark.
“When we switched over to propane, it was an expensive day for us,” he said.
He hasn’t totalled the bills yet, but said the cold weather likely cost tens of thousands of dollars for propane, overtime and the campus shutdown. MSUB will continue to use “interruptible” gas, McGimpsey said, but needs to fine-tune its backup system.
In addition to the cost of the natural gas, MDU charges a stiff penalty when noncustomers temporarily want to tap into its supply. The penalty is $50 per dekatherm.
At 20 below zero, McGimpsey said the main campus burns through about 500 dekatherms of natural gas per day.
“Our surcharge would have been more like $30,000 a day,” he said.
MDU faces the same situation if its exceeds its pipeline contract, Hanson said.
“If you go over, we would face a penalty, too,” he said.
MetraPark dodged that particular surcharge because it was able to restart its propane system by MDU’s noon deadline.
Even after this experience, Seward said it is an open question whether MetraPark sticks with its current contract, which has worked well for a decade.
“I think the (Yellowstone County) commissioners will revisit the “interruptible” gas contract and decide if they want to do this,” he said. “It’s a tough decision.”
Adding another propane tank to MetraPark’s existing 1,000-gallon tank would be an additional safeguard, Seward said.
MSUB’s McGimpsey said the university will likely keep its interruptible gas contract because the savings are worth it.
“It’s a good thing. We just need to get our propane system back up and running,” he said.
Meanwhile, Turner said the experience was a bit of a lucky break, time-wise.
“If the storm had lasted longer, we might have had to buy more than one day of $8,000 gas,” he said.