Why Your Energy Bill Could Be Higher this Winter
1. High Cost of Fuel Due to Capital Investment
One reason your energy bill may be higher this winter is that utility companies are passing the cost of fuel to ratepayers at no markup. This means that high energy bills are often due to historically high spending on capital investment, such as the case with Peoples Gas. Peoples is overhauling its entire system of natural gas pipes, a project that is costing more than $10 billion and is slated to continue well into the next decade. Residents are paying an average of $15 in a monthly surcharge just to cover the infrastructure program’s costs before they consume a single therm of gas. While the company has called for an end to the surcharge, a debate has been set for 2023 in Springfield to discuss natural gas regulation.
2. A Cold Winter Could be on the Horizon
The high cost of fuel accounts for nearly 80% of the projected gas bill for this winter according to Nicor spokeswoman Allison Erdman Gregoire, so consumers can expect their energy bills to be higher than in previous years. While it's difficult to predict how high these costs will go, it's clear that businesses and households alike will need to be mindful of their spending to keep up with their heating expenses. While these prices could come down, it's more likely that they will continue to increase, especially if the weather is colder than average.
Sources like the Farmers Almanac predicted that the coming winter could be colder than average in many parts of the US, which will cause natural gas customers to turn up their thermostats. This winter, be sure to monitor your energy usage and take steps to conserve where you can to keep your costs down. With the prices of fuel projected to be higher than last winter now is the time to make sure you are as energy efficient as possible.
3. Global Natural Gas Prices on the Rise
In addition to the high cost of fuel due to capital investment, another reason your energy bill may be higher this winter is that global natural gas prices have been increasing. This is due to several factors, including the Russia-Ukraine conflict. As a result of these tensions, Russia has been cutting off natural gas supplies to Ukraine, which has caused prices to rise globally and created a price surge that is being felt as far away as the US. This is likely to have an impact on consumers and businesses over the winter, as the price of heat is expected to increase significantly. “With global natural gas prices climbing even higher since last winter, we fully realize a high level of financial assistance may again be needed to support customers who are having a tough time paying their bills,” said Peoples Gas spokesman David Schwartz.
4. Economic Pressures and Late Payments
Businesses can expect to see a sharp increase in their energy bill this winter, as a result of inflationary pressures and late payment fees. The cost of natural gas has been on the rise since Russia invaded Ukraine in February, and this is likely to continue throughout the winter months. In addition, many businesses are struggling to keep up with their payments, which could lead to even higher energy bills. City households, in particular, have been struggling to make their payments on time, with more than 213,000 customers hit with late-payment fees in July. This is likely to continue over the winter months, putting even more pressure on businesses' energy bills. With inflationary pressure and late payment fees on the rise, businesses and individuals can expect to see a significant increase in their energy bills this winter. To avoid this, be sure to stay on top of your payments and budget for the increase in costs.
5. Low Inventory Levels Driving Prices Up
Another factor beyond the control of the average natural gas customer is decreasing inventory levels. The hotter-than-average summer temperatures caused customers to turn on their ACs, which impacted already low natural gas inventories. As the winter months approach and natural gas remains one of the most popular ways to heat the American home, this could drive prices upwards. Additionally, low production levels within the US are another contributing factor. Hopefully, this incentives production to lower the cost to consumers.
By being aware of the reasons why your energy bill could be higher this winter, you can take steps to minimize the impact on your home or business. Be sure to monitor your energy usage, budget for increased costs, and take steps to reduce your energy consumption. These measures will help you keep your energy bill under control this winter.
Concerned about energy prices for your business? The energy experts at Integrity Energy are here to help! Request a quote today or visit our residential site PriceToCompare.com to get an energy quote for your home.