Natural gas heating costs are expected to increase 12 percent, according to the U.S. EIA report.
Nearly half of all U.S. households heat primarily with natural gas and the EIA expects households heating primarily with natural gas to spend $69, or 12 percent, more this winter compared with last winter.
The increase in forecast expenditures compared with last winter is driven by a 9 percent increase in consumption and a 2 percent increase in price, according to the EIA outlook report.
For the winter of 2017-18, residential natural gas prices are forecast to average $10.36 per thousand cubic feet (Mcf) and average consumption is forecast to total 62 Mcf per household. The increase in consumption reflects forecast heating degree days that are 13 percent higher this winter compared with last winter, according to the outlook.
Also, residential prices include charges to cover utility operating costs and the cost to transport and distribute natural gas that are not directly linked to spot market prices.
In West Virginia, residential natural gas prices in West Virginia in August 2017 averaged $17.47 per thousand cubic feet, which was approximately 3.4 percent less than the national average rate of $18.09 per thousand cubic feet, according to the EIA.
Susan Small, communications director for the Public Service Commission of West Virginia, said there will be a slight increase in the statewide average of natural gas bills this winter.
“There are some slight increases with most of the natural gas companies serving West Virginia,” she said.
A rate chart provided by Small showed 10 of 12 natural gas companies in the state with increased prices in 2017 when compared with last year.
Small said there are two components that make up a residential natural gas utility bill: the cost the utility must pay to obtain natural gas, otherwise known as the Purchased Gas Adjustment (PGA), which is determined in a case by the Public Service Commission, and the base rate, which covers all expenses other than the cost of natural gas the utility incurs in providing service.
“The base rate is determined by the Public Service Commission in 42T and 390P cases,” she explained. “390P cases were authorized by Senate Bill 390, passed in 2015, and provide for the expedited recovery of costs related to infrastructure replacement and expansion.”
By federal law, natural gas prices are not regulated at the wholesale level and generally fluctuate with supply and demand.
“The commission does not regulate the price of natural gas,” Small added. “That price is determined by competitive markets. The commission does examine the gas purchasing practices of gas utilities, reviews the reasonableness of requested increases and ensures the utility did everything possible to obtain a reliable gas supply at the lowest possible market price.”
Kentucky residents who heat their homes with natural gas will see somewhat higher prices at the start of this year’s winter heating season than they did a year ago, the Kentucky Public Service Commission reports.
Like West Virginia, under Kentucky law, gas utilities are entitled to recover the wholesale cost of the gas delivered to their customers, including the fees they pay to interstate pipelines to transport the gas to their distribution systems. The companies’ gas cost adjustments are reviewed by the PSC to make sure they accurately reflect the actual cost of natural gas.
“When base rates – which include monthly customer charges and delivery fees – are factored in, Kentucky residential customers can, on average, expect their total gas bills to be about 12 percent higher this November than last, based on consumption of 10,000 cubic feet of natural gas,” the PSC said in a news release.
The average total monthly bill for 10,000 cubic feet – including gas costs and base rates, but not miscellaneous charges – is projected to be about $99.57, according to the PSC. That is up $10.49 from last year, but a decrease of about $51 since November 2008, unadjusted for inflation, the PSC said.
The PSC says gas prices have risen on average about 13 percent from this time last year, but are still about 58 percent below the November 2008 average price of $11.70 per 1,000 cubic feet (mcf) of consumed gas.
The lower cost of natural gas has more than offset increases in base rates over that time and now represents about half of the average total residential bill, or $48.72 of the $99.57 total, according to the PSC’s calculations.
“Natural gas continues to be plentiful, which has prevented any sharp increases in natural gas prices in recent years,” Kentucky PSC Chairman Michael Schmitt said. “Even with higher demand due to greater use of natural gas to generate electricity and rising gas exports, the supply has more than kept pace.”
Residential natural gas prices in Ohio in August 2017 averaged $27.41 per thousand cubic feet, which was approximately 51.5 percent more than the national average rate of $18.09 per thousand cubic feet, according to the U.S. Energy Information Administration.
“… commodity prices for Ohio’s biggest natural gas utilities are set by the market and are tied to the month-end settlement price of natural gas on the New York Mercantile Exchange,” said Matthew Schilling with the Public Utilities Commission of Ohio. “Additionally, Ohio is also a retail choice state, meaning most natural gas customers can sign up with competitive suppliers to purchase the natural gas commodity from. So if you are a customer and have signed up with a competitive supplier, your bills will depend on your contracted natural gas price.”
Additional information on natural gas prices in Ohio can be found online at http://www.puco.ohio.gov/be-informed/consumer-topics/columbia-gas-of-ohio-standard-choice-offer/
Mild winter predicted
Weather determines the amount of energy that consumers use to heat their homes and thus is the major factor in the size of their heating bills, Schmitt added.
“The extended outlook is for a relatively mild winter in Kentucky,” Schmitt said. “But natural gas prices are driven by demand, so cold weather in our region or to our north could push prices higher later in the heating season.”
Schmitt says consumers would still benefit by taking steps to reduce consumption.
“Continued low prices for natural gas have created an opportunity to invest the savings in permanent improvements, such as weatherization, that will insulate homeowners against higher energy costs in the future,” Schmitt said.
Heating assistance available
For those who heat with electricity, propane or fuel oil, prices are expected to be somewhat higher than last year as well, according to the U.S. Energy Information Administration.
Heating assistance is available from local community action agencies and from utility companies, but funds are limited and sometimes run out during the heating season, so people are urged to research heating assistance programs as soon as possible, officials said.
In West Virginia, the West Virginia Low Income Energy Assistance Program (LIEAP) assists eligible households with the cost of home heating through direct cash payments or payments to utility companies on their behalf. A crisis component is available for households without resources facing the loss of a heating source. For more information online go to http://www.benefits.gov/benefits/benefit-details/1566.
In Ohio, the Home Energy Assistance Program (HEAP) is a federally funded program administered by the Ohio Development Services Agency. It helps eligible Ohioans pay their home energy bill. The benefit is applied directly to a customer’s utility bill or bulk fuel bill. The amount of the benefit is determined by the number of people in the household, the heating source, and the region of residence. Information can be found online at http://www.development.ohio.gov/is/is_heap.htm.
In Kentucky, the Low Income Home Energy Assistance Program helps low-income Kentucky families pay high heating bills. High-energy costs can break a low-income family, or force a family to choose between heat and food or medicine. Information can be found online at http://www.benefits.gov/benefits/benefit-details/1539.
“Do not wait to act until you are in a crisis and in danger of losing utility service,” Schmitt said. “If you anticipate difficulties in paying your heating bill this winter, now is the time to find out where you might be able to receive assistance.”
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