Gas, oil, electricity rates all increase as mercury drops
GHENT–If it seems the polar vortex has put more than an average strain on everything from your back to your pocketbook–welcome to the winter of 2013-14.
The cost of heating homes in Columbia County this winter with most types of traditional energy has gone up for many reasons not just rising costs per gallon or kilowatt hour, but also because we need more energy this year to stay warm, experts say.
Ryan Lane, operations manager at First Fuel and Propane on Route 9H, said “a perfect storm” of cold temperatures, bad weather and exportation of propane elsewhere have created a shortage of the product locally. Severe cold in Canada has kept propane supplies that might have been shipped here from there by rail up there instead, said Mr. Lane. Rail shipments of propane destined for the Northeast have also been stuck in the snow or derailed en route from Canada through the Midwest, he said.
Also last fall, propane was in high demand for use in crop drying due to a wet harvest season throughout the Midwest. Those factors and the decision by suppliers in Texas, who usually deliver propane here by pipeline to Selkirk but who shipped their product overseas for higher profits, have all combined to make propane hard to come by, said Mr. Lane.
While some fuel companies have reported difficulties meeting the demand for propane this year, last summer First Fuel purchased enough for its customers—60 to 70% of whom use propane as their primary heat source.
The price of propane last February for customers who own their own tanks was $2.09/gallon, while this February the price is a dollar more.
The cost of kerosene, which is primarily used by customers with outdoor fuel tanks, has fallen slightly this year from $4.89/gallon last February to $4.59/gallon this February. Unlike fuel oil, kerosene does not gel in cold weather.
Fuel oil costs have experienced just a slight uptick from $4.19/gallon last February to $4.24/gallon this February, said Mr. Lane.
Another contributing factor to the higher cost of staying warm this winter is a greater number of heating degree days (HDD), a complex calculation related to the amount of energy it takes to recover heat each time the temperature slips below 60 degrees. It also takes into account a building’s K-factor which is connected to the size of the building and how well it is insulated.
Last year from September 1, 2012 to February 18, 2013, there were 4,174 HDD; for the same period this heating season there were 4,681 HDD. According to Mr. Lane, that means to heat a house with a K-factor of 10 will require 50 gallons more of fuel this year than last.
Harry Hicks, owner of H.L. Fuel Company, Inc., in West Lebanon serves customers in north and central Columbia County and southern Rensselaer County. He said his customers paid $4.19.9/gallon for fuel oil last year and this year the price is $4.25.9/gallon.
He sees the price of heating oil as being driven by stock market speculation, with companies investing millions or billions of dollars in oil as a commodity. When these large investors believe the market price is highest, they sell their shares until the price falls back. Mr. Hicks said the oil industry “loves” the price swings in oil because “they can produce it for 50 cents or a $1 gallon.” Though several years ago Congress passed a law limiting speculation, enforcing the law has been difficult, he said.
Another hit in the retail energy budget this winter is being felt by customers of National Grid. The company supplies electricity to the western side of Columbia County (and also gas to some customers) and also serves large areas of the northern and western parts of the state.
“The unusually cold weather that has gripped the region has caused energy supply prices to surge in New York State and throughout the Northeast,” New York State Public Service Commission Chair Audrey Zibelman said in a January 29 press release.
“This price spike is impacting National Grid’s upstate service territory, where electricity prices could increase by as much as 27% in February,” Ms. Zibelman predicted.
In an effort to mitigate the large cost increases faced by upstate residential and small business customers, the commission authorized National Grid to take immediate action to provide its customers with $32 million in temporary credits to offset an unprecedented increase in electric supply costs.
“These millions of dollars in temporary credit will help upstate New Yorkers and small businesses, who may already be struggling to pay their bills,” Ms. Zibelman said in the release.
While all utility customers around the state are facing higher-than-normal electric bills due to the unusually cold weather, the PSC said electric supply increases for National Grid’s upstate residential and small business customers are been expected to be much higher in February than any other area in the state. As an example, the PSC anticipates that a “typical residential bill” increases for 600 kWh (kilowatt hours) ranged between $12.75 (17.6%) and $29.74 (27.2%), depending on the customer’s location.
The PSC said it will review “the reasonableness of National Grid’s hedging practices and retail rate mechanisms to avoid similar occurrences in the future.”
Chair Zibelman said she “strongly” encourages all investor-owned utilities in the state to notify eligible residential customers about the advantages of using a budget plan to spread out the recent price increases in supply costs.
“With a no-fee budget plan, a customer could spread out their bill payments over a 12-month period, rather than paying a larger-than-expected increase in a single month,” she said.
Similarly, Mr. Lane at First Fuel said his company strives to get as many customers on a budget program in the spring as possible. It allows them to make smaller payments throughout the year rather than all at once when the cold weather hits.
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