ESG & Industry Updates

EIA Projects Lower Bills for Home Heating Oil and Propane Customers

Posted by Ed Burke on Oct 8, 2014 2:45:47 PM

Person adjusting their residential thermostat

The EIA is projecting lower heating bills for consumers this winter - especially if you use propane or oilheat versus Natural Gas. 

Demand is projected to be down across the board because the latest NOAA projections are looking like this winter will (thankfully) be nothing like the extreme arctic fiasco we had this past winter. 

Heres how the numbers break out:

Natural Gas

  • Demand is expected to be down 10%
  • Consumer price is expected to be up 6%
  • Net change - about $30 dollars off your bill per month

Heating Oil 

  • Demand is expected to be down 10%
  • Prices are projected to be down 15% (or around 25 cents per gallon) due to Crude oil prices dropping
  • The caveat here is that its unknown whether new Sulfur regulations will impact price due to supply/demand/logistics issues 

Propane

  • Demand is expected to be down 13%
  • Prices are projected to be down 24%
  • In the Northeast the propane figures are a little different: 5% lower prices, 9% lower consumption.
  • Last year we saw an extreme propane shortage and logistical nightmares in the propane market. This year inventories are higher than last year in the Midwest and Gulf, but the agricultural yield can impact propane supply levels quickly and harshly, so stay tuned on propane projections after the harvest (corn) season 

So what about here in New England?

As we saw last year, New England Nat Gas prices vary wildly from the Henry Hub spot pricing for Nat Gas. Supply here is a HUGE issue, and we are fighting over any and all pipeline projects that could address that issue in the near term. 

Also, the EIA is projecting that the cost of electricity will be trending down for consumers roughly 2% - but we know that is not the case here in Mass, where we just saw 37% rate hikes approved, on the back of our limited nat gas infrastructure. 

Keep in mind that the majority of cost savings are due to a presumed weather-related demand drop.

The bottom line - if you project that this winter will be 10% colder than average (last year was 11%) Propane and Heating Oil customers still come out ahead and spend less than last year due to the drop in pricing. Natural Gas customers don't fare so well - if their usage mirrors their usage last winter, they can expect a 6% increase in their bill - at least - due to price increases.  Add that to your newly increased electric bill, and heating oil is looking pretty good right now!

 

(PS - if you want the nitty gritty on the Market impacts of todays EIA reports and projections, you can read about that on our Market Update blog here: Retail & Market Prices Drop on Crude Supply & Pricing )

Read More

Topics: natural gas, EIA, national grid, propane, heating oil

Energy in the News - Are Utility Rate Reductions Really A Positive?

Posted by Ed Burke on Aug 8, 2013 1:09:00 PM

This week a Federal Judge ruled that New England utility companies guaranteed profit rates are too high at their current rate of 11.1% and advised they be dropped to 9.7%. According to boston.com, this is projected to save electricity customers in Massachusetts approximately 50 million dollars a year (out of 115 million for New England as a whole).  

You can read the Boston.com article here: Federal Judge Rules that Utility Profits Too High

However, utilities argue that these levels of return are necessary to make transmission improvements to avoid issues like those we experienced in New England in 2011. It was only about 2 years ago that Massachusetts and the New England region suffered huge, extended power outages from a couple brutal storms.  Additionally after Hurricane Sandy and events like it, we all seem to agree that there’s improvements needed in electric transmission and supply – and in fairness, utilities have projected huge spending on these projects in the coming years.  

An important point to remember also is the monumental, round the clock work utilities put in in emergencies like Sandy, tirelessly working to restore power to impacted areas. Our work in Emergency Fueling & Response has let us see that first hand and let me assure you, these people are unbelievably great in times of crisis. In theory these transmission upgrades should mean that in times of crisis, the outages will be a lot more manageable which should be a positive for just about everyone. 

The Edison Energy Group, according to Boston.com has stated that investor-owned utilities will spend over 26 Billion on transmission improvement projects in2014 & 2015, and Massachusetts alone is expected to see 67 million dollars in improvements by 2017. That’s a pretty impressive level of investment and utilities argue those dollars come from their ability to project profit levels based on the guaranteed rates in question.

On the flip side however, Massachusetts has some of the highest electrical rates in the country, along with Connecticut and other New England States. According to the US Energy Information Administration. You can see the chart of rates here: EIA.gov 

Additionally, one of the regions’ major utility parent companies reported earnings 33% higher than in 2012. The year before that saw some controversy over bonuses paid out to utility executives, which seems to have been what spurned the case for lowered rates started two years ago by Massachusetts Attorney General Martha Coakley’s office.

Massachusetts consumers won’t see too much of an impact on their personal home bills, but businesses could benefit greatly from lowered costs. However, is there a potentially disastrous cost in the future without the transmission updates utilities say can only occur at the higher percentages?

What do you think?

Is this a good ruling or one that may seem “penny wise and pound foolish” in the event of another major storm impacting the area?

Read More

Topics: EIA, Hurricane Sandy, Utility Rates, Emergency Fuel, Massachusetts

Recent Posts

Posts by Topic

see all