CAPITAL REGION – National Grid is forecasting that its typical residential customer’s natural gas bill in the coming heating season will be about 31% higher than last year, based mostly on increased demand for natural gas.
The utility projects what it defines as a “typical residential customer” will pay $651 for heat from natural gas during the five-month period from November through March 2022. That’s a 31% jump from $496 during the same time period last year.
“This is the largest increase that we’ve seen in many years,” a National Grid official said Thursday during a conference call with reporters to explain the anticipated price increases.
Melanie Littlejohn, the National Grid vice president of customer and community engagement in New York, spoke on the conference call. She cautioned that the cost per month for a typical National Grid customer is based on the winter being typical in terms of temperatures and the customer consuming 713 therms of natural gas during the five months of winter. A therm is equal to 100,000 British Thermal Units, each of which is the amount of heat needed to raise the temperature of one pound of water by one degree.
“The forecast is based on information available at the end of September, and assumes normal winter weather, because energy costs and use are impacted by weather conditions,” she said. “We want to remind everyone that forecast figures that we are providing today are approximate and based on a current snapshot in time.”
The projected typical five-month winter heating cost of $651 can be broken down into two parts, National Grid’s delivery charge of $284 and the natural gas commodity price of $367 – which, if it happens, will be the highest commodity price for the fuel source since the 2013-14 winter heating season when it was $377.
The 10-year high mark for natural gas was set during the 2010-11 heating season when it was $492 for the winter season.
Littlejohn said National Grid tries to flatten out the monthly cost of natural gas by using its natural gas storage capacity, natural gas commodity futures contracts, and contracts that lock-in prices over a period of time to avoid spikes in the cost.
“Our customers pay exactly what we pay for energy, and not a penny more,” she said. “And that cost is reflected in the energy supply portion of the bill.”
Littlejohn said National Grid encourages its customers who may be struggling with heating bills to check out links on the company’s website for information about National Grid’s Energy Affordability Program, which provides income-eligible customers with a monthly bill credit and uses funds from the Home Energy Assistance Program.
“National Grid customers who qualify for HEAP are also eligible for additional discounts through our Energy Affordability Program, as well as many other payment and billing options,” she said.
National Grid has also proposed a three-year delivery rate increase schedule for both heat and electricity to the New York Public Service Commission, the state agency that regulates utility prices.
Under the terms of the proposal, the average residential gas bill for customers who use 82 therms of heat per month over the course of a year would increase $1.51 per month in the first year, $2.37 in year two and $2.56 in year three.
If approved, the delivery rate increase would take effect Jan. 1, 2022. The PSC is expected to decide on the proposal before the end of the year.
The conference call included Richard Meyer, the vice president of energy analysis markets and standards for the American Gas Association.
Meyer said natural gas prices are mainly up due to the economic recovery since the worst part of the coronavirus pandemic.
“That’s the good news,” he said. “People are getting back out. Businesses are opening up and growing again. People are going out to eat. Because natural gas serves as a foundation fuel for heating and powering people’s homes and businesses — natural gas is about one third of total energy demand over the course of the year — because we’re using more energy now, we’re using more natural gas.”
Meyer said that both demand for natural gas and the supply of natural gas has been growing, but the supply has been growing slower than the demand.
“[Natural gas] prices are higher now than they have been during this part of the year in prior years, but if we step back and look to a broader span of history over the past two decades, in the pre-shale days if you will, prices still remain relatively low and stable compared to history,” Meyer said, referencing the practice of extracting natural gas from shale formations. “Where at one time we saw, at this time of the year, prices upwards of $14 per [million British Thermal Units], now we’re seeing it in the $5.60 to $6 range. Which is higher than recent history, but still lower than the past.”
Meyer said technology has vastly increased the potential supply of natural gas in the United States, but the resumption of natural gas drilling has been slow during the coronavirus pandemic. He said the low natural gas prices seen during the pandemic have instilled more discipline in drilling companies’ willingness to expand operations.
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