Utilities in New York and New England are warning customers to expect higher residential heating bills this winter amid surging global natural gas demand and prices.
National Fuel Gas Distribution Corp. said Thursday that for its residential customers in Western New York, it expects the average winter heating bill, i.e. for November through March, to be $714. This is up 43% from last winter’s $498 average, when temperatures were about 10% higher than normal, the National Fuel Gas Co. subsidiary said.
“Market prices for natural gas supplies have increased significantly from the historic lows experienced in the winters of 2019-2020 and 2020-2021,” the company said, citing that New York Mercantile Exchange natural gas pricing for winter delivery recently topped more than $6/MMBtu. This is more than double last winter, when prices averaged under $3.
“This rise – driven by several economic factors, including global demand for domestically produced liquefied natural gas, disruptions in domestic production, and lower-than-average national storage inventory levels – has caused an increase in the cost of natural gas purchased and placed in storage by the utility to meet customer heating needs for the upcoming winter,” the company said. “As required by state regulations, the utility is required to purchase sufficient quantities of reliable, least-cost natural gas supplies to meet customers’ demands during a colder than normal winter.
“Natural gas supply costs are passed along to customers dollar-for-dollar with no mark-up or profit to National Fuel.”
The company offered some perspective on the price spike, highlighting that even higher prices than those expected this year used to be the norm.
“Despite this cost increase, National Fuel’s customers continue to benefit from their proximity and access to abundant, reliable and lower-cost natural gas supplies produced in Pennsylvania, Ohio and West Virginia,” the firm said. “Overall, cumulative winter heating costs remain lower than what customers experienced during the winters of 2005 through 2009 – $900-$1,200 – before shale gas became widely available.”
National Fuel also filled its storage inventories with regionally produced gas over the summer when prices were lower, management said.
“This coupled with the utility’s diversified purchasing strategy is expected to help mitigate further [price] increases during the upcoming winter as well as meet customer demand even during the most extreme weather conditions,” National Fuel said. “With an underground delivery system that has proven to be storm-resistant, National Fuel seldom has weather- or storm-related interruptions and has a greater than 99.99% reliability ratio for its gas delivery.”
The company also noted that “substantial financial assistance” is available for low-income households to pay their gas bills through Gov. Kathy Hochul’s recently announced Home Energy Assistance Program Regular Arrears Supplement, aka HEAP RAS, as well as various assistance programs offered by National Fuel itself.
Why are Natural Gas Prices Rising?
In Massachusetts, meanwhile, Eversource Energy on Wednesday filed a request with Massachusetts Department of Public Utilities (DPU) to raise rates to account for the rising cost of gas supplies.
The rate hike, if approved, would take effect on Nov. 1, along with proposed adjustments to other portions of the bill related to safely and reliably operating the gas system.
“After hitting 10-year lows during the Covid-19 pandemic, the price of natural gas has risen by approximately 20% – impacting customers nationwide and across the globe,” said Eversource. “The main driving factors include an increase in global demand during the ongoing economic recovery and a lagging recovery to the significant drop in U.S. gas supply due to a number of issues including the pandemic and extreme weather in gas-producing states.”
If all the proposed adjustments are approved by the DPU, an average Eversource residential customer in Massachusetts in the former NSTAR Gas service territory will see an increase of roughly 12% on their natural gas bill versus last winter, from $203/month to $228/month.
An average Eversource customer in the former Columbia Gas of Massachusetts territory would see an increase of about 21%, from $197/month to $238/month.
“With supply constraints, extreme weather and other challenges related to the pandemic driving up natural gas prices across the globe, we’re focused every day on helping our customers better manage their own energy use while also working with partners across the commonwealth on innovative solutions to help achieve our shared clean energy goals,” said Eversource’s Penni Conner, senior vice president. “We understand the effect that higher energy costs and increased energy usage can have on our customers…and we want them to know we’re here to help with energy efficiency solutions, payment assistance plans and other programs to help support customers.”
Markets view New England as especially vulnerable to price spikes this winter, as it depends on liquefied natural gas imports during cold snaps due to pipeline constraints in the region.
Forward prices at Algonquin Citygate, the benchmark for New England gas, stood at $22.404/MMBtu for January and $21.700/MMBtu for February as of Friday, according to NGI’s Forward Look.
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