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Issues that led to propane shortage remain unresolved

By DOUG BELDEN, St. Paul Pioneer Press

ST. PAUL — When state lawmakers rushed to approve $20 million in emergency heating aid in February, there was lots of talk about coming back to address the deeper structural issues that contributed to the severe propane shortage and consequent price spike.

With two committee deadlines now come and gone, the bill that’s had the most hearings would protect consumers but would do little to avoid the shortages. Of the two other bills making headway at the Capitol, one simply calls for a study and the other’s fate is doubtful.

All of this comes as a critical milestone looms in coming weeks: the conversion of a pipeline out of Canada that will take away up to 40 percent of the propane used by Minnesotans.

If state lawmakers make no adjustments to affect the propane supply and distribution system this session, are we setting ourselves up for another emergency scramble in 2014-15?

“That’s really hard to say. Are we going to have an exact repeat of what we just went through, last fall and this winter? If we do, would we struggle? Absolutely,” said Roger Leider, executive director of the Minnesota Propane Association.

This winter has been historically bad, with a wet, cold fall that required significantly more propane to dry crops, followed by brutally cold weather that sent residential demand soaring.

The propane industry has been preparing for the upcoming loss of the Cochin pipeline, Leider said, including increasing storage capacity and rail capability.

Propane wholesaler CHS Inc. is expanding storage and rail handling capability in Rockville and more than doubling the size of its facility in Glenwood, Leider said.

In addition, a terminal in Benson served by the Cochin pipeline is in the process of being converted to a rail facility, he said.

Still, those industry efforts need some goosing from the state this session, said state Rep. Pat Garofalo of Farmington, the Republican lead on the energy policy committee.

“Otherwise, we’re playing with fire,” he said.

Officials must work to accelerate the development of infrastructure needed to deal with the changes, Garofalo said.

“Now that it’s warming up, and propane prices have gone down, the public is under the misunderstanding that the problem has been solved, and it hasn’t,” he said.

Garofalo recommends pushing to free up capacity in the rail system — in part by advocating for approval of the Keystone XL pipeline — along with creating incentives to boost storage and conversions from propane to natural gas.

Skepticism about solutions

But the chair of the energy policy committee, Rep. Melissa Hortman, DFL-Brooklyn Park, is skeptical both about the need for more storage capacity and the wisdom of converting from propane to natural gas.

“I don’t know that we have inadequate propane storage in Minnesota. ... I’m not saying that there could not be data out there, but it hasn’t really been presented to us,” she said.

This past winter was like an especially bad flood, Hortman said, in that the state should use it to get ready for potential extreme situations in the future.