The frigid winter is costing you each time your furnace kicks on.
So far, the cold temperatures have tacked on almost $100 to the average Western New Yorker’s heating bill, compared with what they paid during last winter’s mild weather. And by the time spring arrives at the end of next month, it’s likely that a typical resident will have shelled out a minimum of $165 more than they did last winter to heat their homes.
That’s the price residents across the Buffalo Niagara region are paying for this winter’s brutally cold temperatures, which have caused furnaces to run more frequently and have pushed the spot price of natural gas up to levels that haven’t been seen in more than four years.
“Everybody’s usage is up,” said Gary Marchiori, the president of EnergyMark, an Amherst energy marketing company. “When you get days with high wind and the cold, those are the peak days.”
But there’s also a silver lining to the story: It could have been a lot worse.
Because the nation is producing so much more natural gas from shale formations, such as the Marcellus Shale in Pennsylvania, natural gas costs a lot less than it did as recently as 2008.
So even though January was the sixth coldest in the last 140 years and February is on pace to also be the sixth-coldest, heating costs this winter are likely to be almost $300 less than they were during the four winters from 2005 to 2008 when consumers grappled with bills that averaged more than $1,000.
“It’s a better picture than it was five years ago,” said Karen L. Merkel, a National Fuel Gas Co. spokeswoman. “It’s certainly a new era on gas pricing, and you have to remember how warm it was a year ago.”
Still, consumers who can least afford the higher heating bills are the ones who are getting hit the hardest, often because they live in homes that are drafty and poorly insulated, said Aaron Bartley, the executive director of PUSH-Buffalo, a local advocacy group that has been seeking increased funding for weatherization and energy efficiency programs.
“Low-income consumers are finding it harder than ever to keep their homes warm while avoiding the threat of utility cutoffs,” he said.
Applications for the Home Energy Assistance Program, which helps low-income residents pay for their heating bills, are up 14 percent this year, said Karen Rybicki, the assistant deputy commissioner for the Erie County Department of Social Services.
The higher heating bills “can have a huge impact” on consumers with a tight budget, she said. “Do I pay my gas bill or go grocery shopping and spend that extra $50 on food or on rent?” she said.
For the first time this winter, officials from National Fuel have compiled data based on actual gas usage by their customers showing just how this year’s heating bills stack up against previous heating seasons, which run from the beginning of November through the end of March. Here are their major findings:
• Heating bills for the first three months of this winter (November through January) have averaged $418. That’s 30 percent – or about $97 – higher than during the same three-month period last winter.
• Because the last two winters have been so unusually warm, National Fuel officials say a better comparison is to look at the average of the previous five winters – a period that began when natural gas commodity prices began plunging heading into the winter that began in late 2008. Even then, heating costs during the first three months of this heating season are running 8 percent higher.
• If temperatures stay normal during the last two months of the heating season (and this February has been 20 percent colder than normal so far) heating costs for the five-month heating season are expected to average $752 this winter: 28 percent – or $166 – more than last year.
That would make this winter the worst for heating costs since the winter of 2008-09 – the last winter before the boom in shale gas production sent prices plunging and spawned a new era of lower heating costs for Western New Yorkers.
• This winter has been getting worse for heating costs as it goes along. November’s average heating costs were 6 percent higher than a year ago and the second highest in the last five years. December was 34 percent more costly than last year and 13 percent higher than the average over the last five years. January was 43 percent more expensive than last year and 8 percent above the five-year average.
National Fuel’s customers used more natural gas on Jan. 28, when temperatures hit a high of 7 degrees and a low of zero, than they have on any single day in the last 10 winters, Merkel said. Natural gas demand on that late-January day was 70 percent higher than on a typical January day.
“More energy use translates into higher bills,” she said.
Increased gas use has been partly offset by the decline in gas prices. Natural gas futures prices, which stood at around $8 per 1,000 cubic feet at the beginning of the 2008-09 heating season, had fallen to less than $4 heading into this winter, thanks to increased gas production. Prices topped $6 for the first time in four years on Wednesday and finished the day at $6.15 – their highest level since December 2008 – as the continued cold across the country has cut natural gas stockpiles to their lowest levels in 10 years.
“There’s more volatility in the energy markets,” Marchiori said, partly because of tight pipeline capacity for moving natural gas from sites to the south, such as Pennsylvania, to markets in the north, such as upstate New York.
But National Fuel’s customers have been somewhat insulated from some of the market’s biggest swings. For starters, New York utility regulations include a weather normalization clause that helps smooth out the month-to-month fluctuations in bills that are caused by changes in temperatures.
In addition, National Fuel locked up pricing on 55 percent of its expected natural gas supply even before the heating season began, through a combination of gas that it purchased and put into storage underground and through futures contracts, Merkel said.
The Erie County Department of Social Services is continuing to accept applications for both the basic and emergency HEAP benefits through March 17, Rybicki said. To apply for HEAP, call 858-7644, or apply online at www.mybenefits.ny.gov.
Merkel also recommended that consumers having trouble juggling their gas bills look into the utility’s balanced billing plan, which spreads annual natural gas costs over 12 equal monthly payments.
Winter Average heating cost
2013-14 $752* (projected)
SOURCE: National Fuel Gas Co.