Gas prices, weather affect utilities
The cost to heat homes is anticipated to rise due to wholesale rate increases in natural gas and cold weather earlier in the season, according to Bill Stone, general manager of the Holly Springs Utility Department (HSUD).
The long-range weather outlook projections by meteorologists with the Tennessee Valley Authority forecast colder than normal temperatures in November and December this year and in January and February of 2019 for this area, he said.
“Sudden and early onset of winter temperatures in November has sent shockwaves through the natural gas markets, with December prices for gas expected to be markedly higher than in November,” Stone said.
Earlier projections four to six weeks ago predicted that prices for natural gas would be about the same as they were last year during this season. But latest market projections indicate the wholesale price of natural gas, the price that HSUD pays for gas, could uptick sharply in early December, he said.
Last year wholesale gas prices were about $3.01 per MMBTU (a unit that expresses the energy content of fuel). But now the wholesale gas price is expected to increase by a $1 to $1.70 per MMBTU. HSUD hopes to offset some of the higher priced gas by blending in stored gas that was bought at a lower price during the off-season.
HSUD anticipates the cost of gas to go up.
“In recent months, the cost of gas and pipeline charges made up from 45 to 50 percent of the rate charged to customers, but that percentage to customers could change as wholesale prices change,” Stone said.
Local operation and maintenance is fixed at 54.3 cents per 100 cubic foot of gas.
Wholesale gas prices now are at the highest levels since 2014, he said.
“While, historically, natural gas prices followed crude oil, in the past few years they’ve become inverse to each other: when crude goes down, it tends to drive natural gas up,” Stone said.
Unlike propane, natural gas is not a crude oil product.
Stone said HSUD and its customers were caught off guard in December and January last winter. Locally, customers were very upset by their utility bills in January and February of 2018, Stone said.
He believes the customers should be made aware of possible rising costs of gas and possible colder weather that could increase the cost to heat homes and businesses this winter.
As a matter of fact, HSUD has seen natural gas use increase by 17 percent over last November 20 (month to date, as of November 20), attributable to cold weather blasts.
Stone warns that customers could use more gas and electricity to heat homes than last month and last year on their upcoming bills. Based on a 10-day forecast, this trend is expected to continue and will be reflected in higher bills for customers, whether they use gas or electricity as their primary heat source.
The final determination of November wholesale gas rates to HSUD will be known soon, Stone said.
TVA has already set electric rates for December. The residential rate will be $0.10478 per kilowatt hour, up slightly from $0.10374 in November this year and $0.10182 in December 2017.
This means that a household that consumes 1,000 kilowatt hours will be charged $116.93 in December as compared to $115.89 in November.
New Albany’s plan
“New Albany Light Gas and Water will be in essentially the same position as Holly Springs for electric rates because we are also a TVA customer,” general manager Bill Mattox said. “The increase in natural gas rates should not have a significant impact on our gas users.”
New Albany has planned ahead by putting gas in storage and other measures.
“We have gas in storage that was purchased over the summer as well as gas hedge contracts in place to account for approximately over 80 percent of our expected volume this winter,” Mattox said. “The weighted average cost of this gas is in the $3.20 MMBTU range. Only about 20 percent of our expected load will be subject to the market changes which should cause minimum impacts.
“Based on last winter’s consumption and pricing, our customers could see an average increase of $4 to $5 per month (depending on individual consumption) during the heating season.”
For more information, visit www.hsutilities.com for more information on rates.
Tips from officials
Utility officials remind customers that there are steps you can take to minimize the effect of winter weather on your utility bill:
• Use the sun for heat. Open curtains on your southfacing windows during the winter days to bring free heat into your home.
• Use ceiling fans to your advantage. Changing your ceiling fans to rotate clockwise will trap heat inside to keep your rooms warmer during cooler months.
• Adjust your thermostat down at night - the average bill increases 3 percent for every degree the thermostat is set above 68 degrees.
• Replace air filters. Dirty or clogged air filters force your heating system to work harder for proper airflow, using extra energy and raising costs.
• Decorate with LED lights for the holidays. These lights use 75 percent less energy than incandescent lighting.
HSUD and TVA will conduct a community program on energy efficiency December 13 at the Eddie Lee Smith Multi-Purpose Center. Watch for the full details of that meeting in The South Reporter.