US utilities, facing some of their biggest bills in years, will pay even more this winter as natural gas prices continue to rise.
Natural gas prices have more than doubled this year due to a global supply shortage exacerbated by the war in Ukraine, and are expected to remain high for months as fuel is needed to light and heat homes during the winter. Supply shortages have made it significantly more expensive for utilities to buy or produce power, and those costs are passed on to customers.
From New Hampshire to Louisiana, customers’ electricity rates are rising. The Energy Information Administration expects the residential price of electricity to average 14.8 cents per kilowatt-hour in 2022, up 7.5% from 2021. The agency predicts record gas consumption this year amid rising prices, in part because power generators are limited in their ability to burn coal instead due to supply constraints and factory retirements.
Electricity prices have risen in many parts of the country, along with natural gas prices, as exporters ship record quantities of the fuel abroad due to shortages in Europe, which is trying to reduce its reliance on Russian supplies. Natural gas producers, crippled by pipeline restrictions and investors pushing for austerity measures, have not increased production enough to ease the pressure.
The US consumer electricity price index rose 15.8% in August from the same month a year ago, the largest 12-month increase since 1981, according to a report by the US Bureau of Labor Statistics.
The species is particularly acute in New England. The region is investing heavily in renewable energy sources, but many of those projects are not yet operational and still rely heavily on natural gas for electricity production. The region has limited pipeline capacity and imports large quantities of liquefied natural gas, which are more scarce due to European demand.
a utility that serves approximately four million electricity and natural gas customers in Connecticut, Massachusetts and New Hampshire last month implemented an unprecedented price hike for customers in New Hampshire. Rates have more than doubled from about 10.67 cents to 22.57 cents per kilowatt hour and will remain at that level through January.
James Daly, Eversource’s vice president of energy supplies, said tariff increases seem especially strong in New Hampshire, as regulations require the company to contract supplies less frequently than in other states, where price increases are more gradual as a result. He said wholesale electricity prices have roughly tripled since 2020, to $130 per megawatt-hour during peak demand periods.
“We are still seeing the effects of the war in Ukraine on liquefied natural gas prices, which is affecting our winter supply,” he said.
Donald Kreis, who works on behalf of utility customers through the Office of the Consumer Advocate in New Hampshire, said his office has recently seen a sharp increase in calls from customers concerned about their ability to cope with the rise in electricity prices. can. The cost of supplying natural gas and heating oil has also risen, making residential heating more expensive as it gets colder.
“People are really panicking because winter is looming,” he said.
The National Energy Assistance Directors Association has forecast the highest winter heating season in a decade — a 35% increase to an average of $1,202 from two seasons ago — and a likely shock to consumers.
“For families with limited discretionary incomes, this is a very heavy burden because we’ve had a long period of very affordable energy in the house,” said Mark Wolfe, executive director of the group, which represents state directors of the federal program to help low-income families. behind on the energy bill. About one in six American families is already behind on energy bills, NEADA estimates.
Duke Energy Corp.
, a North Carolina-based utility that provides electricity and natural gas in parts of seven states, has made efforts to manage gas price volatility with hedging strategies. The company recently warned residential customers in Florida, where regulations limit hedging, to expect bills to rise an average of 13% from January.
“The spot prices we’re seeing for natural gas are very scary,” said Nelson Peeler, Duke’s senior vice president for transmission and fuel strategy. He added that fuel costs can make up at least 30% of a monthly bill with prices at such high levels.
In Louisiana, where power generation is leaning heavily toward natural gas, rising fuel costs are on top of recovery costs being charged by utilities to recoup damage from a brutal series of storms that have ravaged the state. A particularly warm June and July meant that people used more air conditioning than usual.
“Not only did we have higher rates due to those high natural gas prices, we also had higher consumption,” said Phillip May, Entergy chief executive. Corps
Louisiana Company. “It comes at a time when they’re seeing higher supermarket prices and higher gas prices.”
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In Louisiana, Entergy is recovering fuel costs on a monthly basis, meaning customers felt a spring surge in natural gas prices in June bills.
“Louisiana saw the effects of these gas prices immediately, faster than just about any other state, but those price changes are coming to every state,” Mr May said.
Entergy’s fuel costs rose 91% in July from the same month last year, according to a report from the state regulatory agency. Total bills were up about 38%, Entergy Louisiana said.
A $150 monthly increase in her utility bills to about $320 led Chrystal Simon Boutte to use two white poster boards they bought from Dollar General to create a Halloween costume that looks like a giant Entergy bill. “Bring the shock,” she wrote in an August Facebook post of herself in costume — with her head poking through a circle cutout — that got 1,400 likes and 700 shares.
“It’s a legitimate fear when I get my email notifications that my Entergy bill is ready. I’d rather have Michael Myers knock on my door right now,” Ms. Boutte said of the villain from the ‘Halloween’ movies.
Write to Katherine Blunt at Katherine.Blunt@wsj.com and Jennifer Hiller at firstname.lastname@example.org
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