If you haven't noticed it already, you should expect to see your energy bills increase as we head into winter. The U.S. Department of Energy says electricity nationwide is increasing, but it's the natural gas portion of your bill that will show the largest jump.
A Cincinnati-area energy consultant said we can expect to see those prices stay high for a while to come, too.
"Electricity and natural gas are both getting more expensive," says Jeff Wedgeworth, a technical manager with One Energy Analytics, an energy advisory group. "Folks with natural gas are certainly seeing that to a higher degree."
Wedgeworth describes the energy pricing situation as complicated. In the past, prices might spike because of a one-off event like a natural disaster — he notes most of our natural gas now comes from the Appalachian region rather than Texas, which is more prone to weather-related price spikes — or "OPEC posturing." Now you also have to factor in supply chain issues and labor shortages.
That's all being felt most dramatically in natural gas prices, which are driving your rapidly increasing energy bill.
"We are increasingly dependent on natural gas, and natural gas over the past 15 (to) 20 years has really become a global commodity," he explains.
Of course, the COVID-19 pandemic has only made it worse.
"Coming out of the pandemic, demand for natural gas dropped and the price followed," Wedgeworth says. "We saw a lot of folks who drill for natural gas start pulling rigs out of the ground; they just weren't drilling as much because they weren't making as much money."
He said that means we started the year with a lesser supply of natural gas and now the concern is whether there's enough stored underground for the colder months.
The global demand for natural gas is pushing domestic prices up. That includes worries about instability caused by Russia's war on Ukraine. Russia is a major exporter of natural gas, but, Wedgeworth points out, "as far as everybody else in that area is concerned — the importers — that gas is gone."
That leaves space in the European market for U.S. natural gas companies to make big profits by exporting and selling natural gas overseas. As domestic companies are getting their production capacity up to pre-pandemic levels, they're choosing to send more abroad. Wedegeworth estimates it's about 15% to 20% of the total supply.
"Folks can make three to four times as much money for natural gas selling it abroad as they can domestically. So the energy prices in Europe are very, very high right now, which is incentivizing liquefied natural gas production," he said, adding, "and that's expected to rise over the next few years."
He doesn't see that changing either.
"If we have a mild winter, we should see prices start to come down. But I don't anticipate seeing prices come down dramatically over the next couple of years. We're not going to see this major shift that we've seen over the past six to eight months, but I don't think we're going to go back to the kind of normal levels that we've been used to over the past decade for a few years yet," Wedegeworth said.
The electricity portion of your bill for folks in the Duke Energy service area in and around Cincinnati will remain pretty stable through next June since those rates are already locked in. However, "come next June, we'll definitely see increases in electricity rates."
What can you do to ease the price punch?
There are a few things homeowners can do to try to mitigate billing increases. For starters, if your community offers an aggregation program, make sure you're in it. Aggregation programs work by banding together to negotiate electric and natural gas rates. These are oftentimes better than what you can get from the local utility, Wedgeworth explains.
If you aren't in an area with an aggregation program, he recommends checking out Ohio's Apples to Apples website. The site is a marketplace for showing the electric and natural gas rates that different suppliers offer throughout the state.
He does have a tip, though.
"I would highly recommend if you're looking at a contract on that site, that it's a fixed price; that it has no early termination fee; and that it has no monthly fees associated with it in addition to the per unit energy rate," Wedgeworth said.
Duke Energy also recommends these energy-saving tips:
- Reduce your thermostat to the lowest comfortable setting. If you have a heat pump, maintain a moderate setting or use a programmable thermostat specifically designed for use with heat pumps.
- Leave drapes or blinds open during sunny winter days to allow the sun to warm the house. Close them at night to help insulate your home.
- Have the heating and air conditioning system checked regularly to maintain performance. Duke Energy offers qualified customers rebates to help offset the cost of replacing older HVAC units with more energy-efficient ones.
- Replace standard incandescent bulbs with light-emitting diodes (LED). LEDs are more efficient while giving off the same amount of light.
- Operate ceiling fans in a clockwise direction, which pushes warm air back down into the room.
- Change air filters regularly. A dirty air filter makes a heating system work harder, which uses more energy.
- Set your water heater’s thermostat to 120 degrees to help you reduce your monthly water heating bills.
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