Higher energy prices could be ahead for customers this winter

Increases in the price of natural gas could impact winter energy prices on Long Island and across the country as the cost of supplying fuel for power plants and home heat continues to spike.

The National Energy Assistance Directors Association in a recent report said natural gas bills could be as much as 30% higher for consumers this winter, with the average cost to heat a home rising to $750, from $572 over the same months last winter.

"With gas prices so high and staying there, it’s reasonable for customers to be concerned," said Mark Wolfe, executive director of the Washington-based energy policy and education group.

While wholesale costs have jumped upward of 180% this year, he said, a more likely local scenario is for increases at the consumer level in the Northeast to be 30% or more, depending on how well their energy suppliers have hedged or stored gas at cheaper costs.

On the heels of Hurricane Ida, the U.S. Energy Information Administration last month said it expected wholesale natural gas prices will remain higher both in coming months and in 2022. In August alone, EIA reported, natural gas prices were 77% higher than in the prior-year August. In 2022, the EIA now projects, natural gas prices are forecast to be 13% higher than its previous increased forecast cost.

"Lost production from the storm combined with these current market conditions has limited our ability to build up natural gas inventories, and we expect that will keep prices higher in the short term than we had previously thought," the EIA’s Acting Administrator Steve Nalley said last month.

On Long Island, the power supply portion of electric bills from PSEG Long Island has increased steadily from November-December lows, despite a projection from LIPA last year that the charge would decrease an average of $2.83 a month for residential customers in 2021.

Last November and December, the power supply charge was just over 9 cents a kilowatt-hour. From July through October, the charge has remained above 11 cents, and PSEG, in a statement, suggested further increases could follow as it works with LIPA to hammer out a 2022 budget.

" … As we see gas price trends increase, it puts an upward pressure on the power supply charge," said PSEG spokeswoman Ashley Chauvin, who cautioned it’s "too soon to tell what impact increases in gas prices may have on the power supply charge."

But LIPA said it’s working to hedge against spikes in a way that would moderate the impact of rising natural gas costs — at least through 2021. "LIPA’s fuel costs for the balance of 2021 are approximately 80% hedged, which will mitigate a significant portion of natural gas-price changes for this winter, should they occur," said LIPA, which is also in the process of updating its "full-year forecast for 2022 and does not yet have a projection."

National Grid, which delivers natural gas to some 600,000 Long Islanders for heating and other uses, was similarly noncommittal on the prospect of specific increases. Apart from gas costs, London-based National Grid earlier this year was granted a three-year rate hike that will increase average customer bills by 3.7% in year’s two and three of the rate plan.

National Grid spokeswoman Wendy Frigeria said the company was "updating our forecast" for gas prices through the winter based on current trends. She declined to provide any projection or guidance for what National Grid consumers can expect of winter heating costs in coming months.

But in an apparent reference to past questions of about the company’s ability to meet demand outside of a ill-fated moratorium on new service hookups, she said, "We have robust plans in place to ensure the gas supply needs of our customers are fully met."

With the Associated Press

By Mark Harrington

mark.harrington@newsday.comMHarringtonNews

Mark Harrington, a Newsday reporter since 1999, covers energy, wineries, Indian affairs and fisheries.