Despite drop in natural-gas prices, expect higher home bills this winter
By Burton Speakman
With uncertainty about the severity of weather this winter, natural-gas suppliers are expecting higher costs for consumers even if conditions are average.
The forecast for this winter offers an equal chance of being normal, colder than normal or warmer than normal, said Brian Mitchell, hydrometeorological technician for the National Weather Service in Cleveland.
“The shorter outlook for [the next 30 days] shows that we’re at a greater risk for increased precipitation coming down from the Great Lakes and farther west,” he said.
The only part of the country that appears likely to experience a colder than normal winter is the Far West, Mitchell said.
Because there is no solid projection for the winter weather, natural-gas suppliers are planning on a winter with normal temperatures and precipitation, which would mean heavier use for customers and therefore higher winter heating bills. This would occur despite natural-gas reserves being near 20-year highs and local companies charging less for the gas itself than last year.
Overall gas prices for Dominion East Ohio will be 10 percent less than last November, said Neil Durbin, senior communications specialist for the company.
“Costs may seem drastically higher compared to last year because it was such a mild winter, but they won’t be compared to historical levels,” he said.
There are a lot of things that could affect prices including an increase in demand due to colder weather, Durbin said. Projections at this time show things should bode well for consumers.
“The expectation is supply will remain high because of shale gas development,” he said.
Natural gas prices for the upcoming winter are expected to be slightly above last year’s levels but remain relatively low. The January market price for natural gas is $3.084 per thousand cubic feet (mcf), and January 2013 New York Mercantile Exchange contracts have traded for between $3.60 to $3.80 an mcf, Durbin said. Prices for natural gas from Dominion peaked at $14.56 per mcf in July 2008.
“The market has also been affected by plentiful inventories of natural gas in storage, which have exceeded the record-setting pace of last winter,” he said.
A “normal” winter is being projected, while last year’s was one of the warmest on record, said Sandra L. James, director of corporate communications for National Fuel, which supplies natural gas in Mercer County.
“Expectations are this winter will be 20 to 27 percent colder than last year,” she said. “This will cause people’s gas bills to go up because of increased use.”
The current forecast seasonal bill for the average residential customer for the winter of 2012-13, from November through March, is $619, James said. This projection is based upon the assumption of normal winter weather.
Last year’s average bill was $552, but winter conditions were approximately 23 percent warmer than normal, she said.
“Had last winter in northwestern Pennsylvania been normal, the average residential bill would have been $649, which is higher than what is forecast for this winter season,” James said. “Heating costs are still near the lowest [they’ve been] in more than a decade.”
Bill variance for colder weather will not impact people who are on a budget plan for the monthly costs with their natural gas supplier.