Natural gas customers should prepare for higher bills this winter | Local News
PIERRE – The South Dakota Public Utilities Commission warns natural gas customers to expect higher prices this heating season and suggests South Dakotans take steps now to keep bills manageable this winter. Natural gas customers in South Dakota may already see higher bills, and as temperatures drop the impact on the bill will increase.
Natural gas bills consist of two components. The share for natural gas delivery, which makes up around 30% of the bill, is regulated by the PUC and is unlikely to change. The other part of the bill is for the gas itself and this unregulated price is set by market forces.
“The natural gas industry is suffering from supply bottlenecks while the overall demand for natural gas is increasing at the same time. As a result, homeowners should expect higher natural gas bills this winter, ”said PUC Chairman Chris Nelson. “South Dakota’s regulated natural gas utilities, including MidAmerican Energy Co., Montana-Dakota Utilities Co., and NorthWestern Energy, are currently forecasting a 50-100% increase in residential bills compared to November-February bills for the 2020 heating season -2021, ”he explained.
The current shortage of natural gas is due to several factors. The high demand due to increased exports of liquefied natural gas and the increased consumption of natural gas for power generation as well as the low production due to hurricanes have led to low inventories in the main heating season. Natural gas prices are largely a function of market supply and demand. It is this combination of factors that drives up natural gas prices in the United States.
In addition to the current soaring prices, freezing temperatures across the United States in February 2021 resulted in unprecedented demand for natural gas and extreme wholesale prices for natural gas. The South Dakota PUC worked with every regulated utility company to mitigate the impact on customers. Therefore, part of the projected spike in bills this winter can be attributed to February’s recovery in substantial natural gas costs.
“In recent years, natural gas customers have benefited from low gas prices, so this year’s prices can come with a sticker shock. South Dakota natural gas utilities estimate natural gas prices to be around $ 6 per metric million British thermal unit (MMBtu) this coming winter, compared to prices typically between $ 2 and $ 3 per MMBtu last year. The above-average natural gas prices expected this winter in combination with the residual effects of the unprecedented natural gas prices in February 2021, which the utility companies are currently continuing to recover from customers, will lead to winter billing at a level that will last well over 10 years, “commented the deputy chairwoman of the PUC, Kristie Fiegen.
The utilities want to cushion price increases for customers by purchasing part of the year-round supply at fixed prices and using storage facilities in the winter months. For companies with insurance programs, this can also help offset higher costs.
In addition to increasing heating costs for your home, increasing natural gas prices can also affect other costs. As the leading fuel source for the US utility grid, natural gas provides more than 40% of utility electricity generation nationwide and can lead to increased electricity costs for some.
“These estimated increases are only forecasts. The actual impact on the bill may end up being higher or lower than the utilities forecast. Regardless, South Dakota customers should prepare for higher bills by planning ahead and taking steps to manage their budgets and those costs now, ”said PUC Commissioner Gary Hanson. “Completing an energy audit of your home is a great way to see where your home is losing energy and what repairs or upgrades are worth the investment. Some utility companies offer their customers a free professional evaluation. So reach out to your local utility to find out more and, while you have them on the phone, ask for a budget billing plan that will help spread higher utility bills over several months instead of having them all at once pay, ”he continued.
Other ways to reduce natural gas and electricity consumption include setting your thermostat to a lower temperature, installing a programmable thermostat, maintaining and upgrading equipment for greater energy efficiency, changing stove filters, and saving hot water.
For a list of frequently asked questions about natural gas prices, see the PUC website at https://puc.sd.gov/Publications/naturalgaspricesfaq.aspx. For more energy saving tips and information on energy efficiency programs, contact your local utility or the US Department of Energy’s website.