The price of natural gas has more than doubled this year due to the worldwide supply shortage made worse by Russia’s invasion of Ukraine. It is likely to remain high for months as fuel is required to light and heat homes during the winter. The supply crisis has made it considerably more costly for utilities to buy or generate power, and those expenses are being passed on to customers. (Related: Electricity prices expected to rise significantly this summer)
Customers’ electricity rates from New Hampshire to Louisiana are rising, with the Energy Information Administration expecting the residential price of electricity to average 14.8 cents per kilowatt-hour in 2022 – up 7.5 percent from 2021.
The agency predicts record gas consumption this year amidst soaring prices, in part due to power producers being restricted in their ability to burn coal because of supply restraints and power plant retirements.
Electricity prices have climbed in many parts of the nation alongside natural gas prices as exporters ship record amounts of the fuel abroad due to supply shortages in Europe, which is working to cut its dependence on Russian supplies.
Natural gas producers, crippled by pipeline restrictions and investors urging austerity, haven’t raised production enough to relieve the pressure.
CPI for electricity in August sees largest 12-month gain since 1981
According to a report from the Bureau of Labor Statistics, the consumer price index (CPI) for electricity in August moved up 15.8 percent over the same month a year ago, the largest such 12-month gain since 1981.
The stress is specifically intense in New England, which is investing heavily in renewable energy sources. However, several of those projects are not yet operational and it still depends greatly on natural gas for electricity production. The area has minimal pipeline capacity and imports huge volumes of liquefied natural gas, which are in short supply as an outcome of European demand.
Eversource Energy, a utility company that supplies about four million electric and natural gas customers in Connecticut, Massachusetts and New Hampshire, carried out an unprecedented price hike for customers in New Hampshire last month. The rates more than doubled from nearly 10.67 cents to 22.57 cents a kilowatt-hour and will stay at that level up until January 2023.
James Daly, Eversource’s vice president of energy supply, said that rate hikes appear especially exorbitant in New Hampshire because regulations demand the company to contract for supplies less common than in other states, where price hikes are more progressive as a result. He added that wholesale electricity prices have approximately tripled since 2020, reaching $130 per megawatt hour during times of peak demand.
“We’re still seeing the effects of the war in Ukraine on liquefied natural gas prices, and that affects our winter supply situation,” Daly said.
Donald Kreis, who works in favor of utility customers through New Hampshire’s Office of the Consumer Advocate, said his office has recently seen a dramatic rise in the number of calls from customers worried about their ability to handle the surge in electricity prices. The costs of natural gas and fuel oil delivery have surged as well, making home heating more costly as it gets colder.
“People are really freaked out because winter looms,” Kreis said.
The National Energy Assistance Directors Association (NEADA) has predicted the highest winter heating season in a decade – a 35 percent leap to an average of $1,202 from two seasons ago. NEADA has estimated that about one in six American families is already behind on utility bills.
Meanwhile, Massachusetts energy officials are warning citizens that the rate of heating their homes and keeping the lights on is expected to soar this winter as the price of natural gas surges.
Almost half of New England’s electric generation is powered by natural gas or liquid natural gas, primary commodities that are sold on the world market and subject to its wishes. The area’s relative overdependence on natural gas is going to mean budget-busting electricity bills for many households this winter and state officials are reportedly working with federal counterparts to prepare.
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