As the temperature drops and the frosty grip of winter tightens its hold, there’s more to worry about than just cozy sweaters and hot cocoa. For business owners, the arrival of winter brings with it a seasonal challenge that can send shivers down the spine: rising commercial energy prices. The world of energy costs is as unpredictable as it is dynamic, fluctuating throughout the year due to a number of factors. From the type of energy plan you choose to the ups and downs of Mother Nature, understanding the complexities of heating bills and utility bills in the winter can be a lot to process.
But fear not, there are ways to navigate this wintry maze and minimize the impact of these changing factors. As an energy broker, we are here to shed light on the intricacies of winter energy prices, heating costs, and energy efficiency, providing you with the insight you need to keep your business’s bottom line low and expenses more predictable and affordable. So, grab your warmest mug of knowledge, and join us on our journey to uncover the secrets of understanding and managing your winter energy expenses like a pro.
Reasons Energy Prices are 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, and the rate hikes continue to be debated in Illinois courts.
2. Especially Cold Winters
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 energy where you can to keep your costs down.
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 in the winter is that global natural gas prices have been increasing throughout the years. 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.
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 2022, and this is likely to continue throughout the duration of the conflict. 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 2022. 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 as energy providers need to make up for the lost costs. 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 incentivizes 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.
Are you 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.