Utilities in New York and New England are warning customers to expect higher home heating bills this winter amid rising global demand and prices for natural gas.
National Fuel Gas Distribution Corp. said Thursday that for her residential customers in western New York City, she expects the average heating bill in the winter, that is, from November to March, to be $ 714. This is a 43% increase from the average of $ 498 last winter, when temperatures were about 10% above normal, the National Fuel Gas Co. affiliate said.
“Market prices for natural gas supply have risen significantly from historic lows recorded in the winters of 2019-2020 and 2020-2021,” the company said, citing that New York’s natural gas prices Mercantile Exchange for winter delivery recently exceeded $ 6 / MMBtu. That’s more than double last winter, when prices were on average below $ 3.
“This increase – driven by several economic factors, including global demand for domestically produced liquefied natural gas, disruptions to domestic production, and below-average domestic storage inventory levels – resulted in an increase in the cost of gas. natural gas purchased and placed in storage by the utility to meet the heating needs of customers for the coming winter, “the company said.” As required by state regulations, the utility is required to purchase sufficient quantities of reliable and inexpensive natural gas to meet customer demands during a colder than normal winter.
“The costs of supplying natural gas are passed on to customers dollar for dollar, with no mark-up or profit for National Fuel. “
The company offered some perspective on the price spike, pointing out that prices even higher than expected this year were the norm.
“Despite this increase in costs, National Fuel customers continue to benefit from their proximity and access to abundant, reliable and inexpensive natural gas supplies produced in Pennsylvania, Ohio and West Virginia,” said the society. “Overall, cumulative winter heating costs remain lower than those customers experienced in the winters of 2005 to 2009 – $ 900 to $ 1,200 – before shale gas became widely available. “
National Fuel also replenished its storage stocks with gas produced in the region during the summer when prices were lower, management said.
“This, together with the utility’s diversified purchasing strategy, should help mitigate [price] increases over the coming winter and meets customer demand even in the most extreme weather conditions, ”National Fuel said. “With an underground delivery system that has proven to be storm resistant, National Fuel rarely has weather or storm related outages and has a reliability rating of over 99.99% for its gas delivery. “
The company also noted that “substantial financial assistance” is available for low-income households to pay their gas bills through the Home Energy Assistance Program Arrears Supplement recently announced by Governor Kathy. Hochul, aka HEAP RAS, as well as various assistance programs offered by National Carburant itself.
Why are natural gas prices rising?
In Massachusetts, Eversource Energy filed an application with the Massachusetts Department of Public Utilities (DPU) on Wednesday to increase tariffs to reflect the rising cost of gas supply.
[Actionable Insight: Did you know that NGI is one of only two Price Reporting Agencies that include trade data from the Intercontinental Exchange. Find out more.]
The tariff hike, if approved, would take effect on November 1, along with proposed adjustments to other parts of the bill related to the safe and reliable operation of the gas system.
“After hitting 10-year lows during the Covid-19 pandemic, the price of natural gas has risen by around 20%, impacting customers nationally and globally,” said Eversource. “The main driving factors include an increase in global demand during the ongoing economic recovery and a late resumption of the significant decline in gas supply to the United States due to a number of issues including the pandemic and extreme weather conditions in gas producing states. ”
If all of the proposed adjustments are approved by the DPU, an average residential customer of Eversource in Massachusetts in the former NSTAR Gas service territory will see an increase of approximately 12% on their natural gas bill compared to the last winter, from $ 203 / month to $ 228 / month. .
An average Eversource customer in the former Columbia Gas Territory of Massachusetts would see an increase of about 21%, from $ 197 / month to $ 238 / month.
“With supply constraints, extreme weather conditions and other pandemic challenges driving up natural gas prices around the world, we are focused every day on helping our customers better manage their own consumption of gas. energy while working with Commonwealth partners on innovative solutions. to help us achieve our common clean energy goals, ”said Penni Conner, senior vice president of Eversource. “We understand the effect that higher energy costs and increased energy use can have on our customers… and we want them to know that we are there to help them with energy efficiency solutions, plans payment assistance and other programs to help customers. “
Markets view New England as particularly vulnerable to price spikes this winter, as it relies on liquefied natural gas imports during cold spells due to pipeline constraints in the region.
Futures prices at Algonquin Citygate, the benchmark for New England gas, were $ 22,404 / MMBtu for January and $ 21,700 / MMBtu for February as of Friday, according to NGI’s future outlook.