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The cost of heating homes is up this winter, and supply and demand issues are to blame, experts say.
The U.S. Energy Information Administration in October issued its Winter Fuel Outlook, a report that lists expectations for energy use during the winter months, which says the agency is expecting households across the country to spend more on energy compared to the last several winters.
Of the 41% of U.S. households which use electricity for heating, 6% are expected to spend more this winter — if it is a typical winter. If this winter is 10% colder than average, it goes up to 15%, and if it is 10% warmer than average, it falls to 4%, according to the report.
Half of homes that use natural gas for heating are expected to spend 30% more this winter. If this winter is colder, the percentage jumps to 50%, and if it is warmer, it falls to 22%, the report shows.
The numbers are even higher for homes that use propane or oils for heating. Across the United States, about 5% of homes use propane as a primary heating source, and they will spend about 54% more for fuel this winter. If this winter is colder, that number will skyrocket to 94% more, and if it is warmer, it falls to 29%, according to the report. For the 4% of homes that use heating oil, homeowners will spend 43% more on energy costs. If this winter is colder, the number increases to 59%. If it is warmer, it falls to 30%, the report shows.
Statewide, 59.8% of Indiana households use natural gas as a heating source, 29.7% use electricity, 7.1% use propane and 0.6% use oil, according to the energy information administration.
In Indiana, the cost of propane has increased by more than 52%, from around $1.70 a gallon in November 2020, to around $2.59 a gallon last month. For heating oil, costs increased from around $2.13 a gallon in November 2020, to around $3.30 a gallon last month for residential use — a nearly 55% increase — data shows.
Earlier this month, Gov. Eric Holcomb issued an executive order that temporarily waives service hours regulations for drivers and vehicles that transport propane due to a significant increase in demand and shortage of supplies, which are at their lowest level in a decade. The order will remained in effect Friday.
For natural gas, the cost increased by nearly 11% from around $22.23 per thousand cubic feet in August 2020, to around $24.62 per thousand cubic feet in August, the most recent month with data available. Prices during the summer can sometimes be higher due to supply shortages and increased use of natural gas by the electric power sector, according to the federal agency.
The cost of natural gas has not been this high in a long time. Customers in Johnson County are expected to pay, on average, $105 a month this winter season, which stretches from November to March, according to CenterPoint Energy, a natural gas utility.
During the same period last year, the average bill was $88 a month, said Alyssia Oshodi, a spokesperson for CenterPoint Energy. There are 625,000 customers in CenterPoint Energy’s North natural gas territory, which includes Johnson County.
CenterPoint is not to blame for the increases, as the increases are due to an increase in global demand and lower production, Oshodi said.
Demand for natural gas was down throughout 2020 due to the coronavirus pandemic and warm weather during the spring, and so were prices. During the second half of 2020, prices increased due to lower production and an increase in exports of liquid natural gas, according to the Energy Information Administration.
Production of dry natural gas in the United States declined significantly in 2020 and into 2021, compared to previous years. In December 2019, a production record was set with 97 billion cubic feet a day of gas being produced. For 2020, production averaged 90.9 billion cubic feet a day, according to the federal agency.
At the same time, the number of natural gas exports increased to record levels. Due to low prices, exports increased last year, with exports during the first half of 2020 averaging around 14.3 billion cubic feet a day. During the same period in 2021, exports increased by 3.7 billion cubic feet a day, to an average of 18 billion cubic feet a day, the federal report shows.
CenterPoint Energy does not mark up prices, so what customers pay a month is what CenterPoint pays for the gas. The Indiana Utility Regulatory Commission only allows utilities to recover gas costs that are actually incurred and approved by customers, according to CenterPoint Energy.
Centerpoint also makes a note of this on customers’ bills, which is listed as a “Gas Cost Charge,” according to CenterPoint Energy.
“The purchase is for the customers,” Oshodi said. “We have no control of the costs of (natural) gas.”
The goal for CenterPoint right now is to make sure customers are given correct information about what is happening with the prices. The company is also encouraging customers to sign up for their Budget Bill service, which allows customers to pay the same amount every month for a year, she said.
Customers can also sign up for energy assistance programs, both federal and state, along with the Universal Service Program, a collaborative effort between CenterPoint, Citizens Energy Group, the Indiana Office of Utility Consumer Counselor, Citizens Action Coalition and a group representing industrial customers. The effort provides about $1.5 million in assistance each year to nearly 18,000 customers in Indiana, according to CenterPoint Energy.
“We understand that it is going to be a hard time for everyone in terms of winter heating. We want to help people as much as we can,” Oshodi said.
Making a home more energy efficient can help reduce costs as well, and CenterPoint Energy offers customers tips, tools and rebates. Both residential and small commercial natural gas customers are eligible, and should visit CenterPointEnergy.com or call 1-866-240-8476 for more information, she said.
While the prices are something CenterPoint has not seen in a long time, natural gas is still recognized as one of the most affordable heating sources compared to propane or oils, Oshodi said.
“We know it can cause stress on customers,” she said. “We want them to reach out to us so we can help them if we can.”
