Good news: Heating bills in Ohio expected to be lower this winter

Source: Norwalk Reflector

Weather forecasters see little chance of an encore of last winter’s bitter cold, which means heating costs will likely be lower for most consumers

Meanwhile, many energy companies have used the lessons of last winter to improve their delivery systems, particularly for propane.

So, even if forecasts turn out to be way off, there is a much lower chance of the kind of panic that hit parts of Ohio in January and February.

“Last year was such an outlier,” said Chris Lafakis, senior economist for Moody’s Analytics. “We don’t get these sorts of outliers back to back.”

The most important variables are weather and natural-gas prices.

First, the weather: Ohio’s average temperature from December to February looks to be 2 degrees lower than normal, according to AccuWeather, the forecasting service in State College, Pa. But that’s not as far off averages as last year, when for the same period the average was 4 degrees below normal.

“It won’t be as severe as it was last winter, but it’s not going to (be so warm that) you say, ‘Geez, this is a mild winter,’??” said Bob Smerbeck, a senior meteorologist for AccuWeather.

The National Oceanic and Atmospheric Administration is also saying that the period between December and February is poised to be warmer than the same period last year for the region that includes Ohio.

As for natural-gas prices, the Energy Information Administration is predicting that market prices will be lower than they were a year ago.

At the same time, gas consumption will be down, according to a forecast from Columbia Gas of Ohio. The utility says an average household is expected to use 12 percent less gas in December through February compared with the same period in the prior year.

In Ohio, 66 percent of households heat their homes with natural gas, according to the Census Bureau. Households using electricity represent 23 percent; propane, 5 percent; and heating oil, 2 percent.

The outlook for electricity costs this winter isn’t as budget-friendly as the natural-gas outlook. American Electric Power says a central Ohio customer using 2,000 kilowatt-hours per month in November will have an estimated total bill of $276.34, an increase of 11 percent from the prior year (2,000 kwh is close to the typical electricity use for a house with electric heat).

AEP’s rates are rising because of changes in fuel costs and several additional charges that have been allowed by state regulators as the utility gradually switches to prices that are more closely tied to market forces.

Last winter’s weather put strains on systems that deliver natural gas and propane. Since some electricity-producing power plants are fueled by gas, the problems extended to the electricity supply.

Propane retailers had some of the most extreme shortages, leading to delayed deliveries and anxious customers, some of whom came close to running out of fuel. State agencies pitched in to get emergency refills for some consumers.

There will be no repeat of those problems, said Dave Wedderbum, vice president and general manager of Collett Propane in Xenia.

“We’re much more prepared as an industry than we were last year,” he said.

He is encouraging his customers to get their tanks filled before winter. Last year, some people went into the coldest months without full tanks, which led to some of the emergency situations, he said.

Right now, fixed-rate propane contracts can be had for about $1.80 to $2.30 per gallon, according to retailers. At last winter’s peak, the fuel was selling for more than $4 in many places.

Customers also can get fixed-rate contracts for natural gas and electricity.

Last year, customers who locked in their prices in the summer had a pretty good chance of saving money in the winter, depending on the contract terms. But that is much less likely to happen this year, said Bruce Hayes, utility analyst for the Office of the Ohio Consumers’ Counsel.

“I don’t think you can assume anything other than normal” weather and prices, he said.

Unless there is another run of extreme cold, he thinks that most fixed-rate gas contracts will end up costing customers more than they would pay at the variable rates that serve as the regulated prices from Columbia Gas.

If that is too complicated, Lafakis has a much simpler explanation for what will drive your heating bills.

“It all depends on weather,” he said.