Winter heating costs falling for electricity customers, rising for natural gas users

Whether your heating costs go up or go down this winter will largely depend on your utility company, and in the coming months the winners on rates will be the state’s 2.9 million residential electricity utility customers.

Either way, whether your heating source is an electric heat pump or a natural gas furnace, the 12-month price difference between this winter and last is not going to be incremental.

Take the most glaring example: Households in Johnston and Harnett counties that are customers of Piedmont Natural Gas will pay $114.03 a month on average this winter, up 18.2 percent from $96.51 a month last winter.

Likewise, PSNC Energy households in the Triangle and elsewhere will pay $85.62 a month on average this winter, up 9.4 percent from $78.26 a month last winter. These numbers are based on rates approved by the N.C. Utilities Commission and average residential winter usage, according to the N.C. Public Staff, the state agency that advocates for utility customers.

Those two gas companies serve more than 1.1 million residential customers, or about 24 percent of North Carolina’s households.

Meanwhile, a typical residential bill for Duke Energy Carolinas, which provides service to the western Triangle, will be $103.44 effective January, down 3.4 percent from $107.11 a month last winter. Similar story for Duke Energy Progress households, where the typical monthly bill will fall to $99.04 in January, a 5.4 percent drop from $104.73 over 12 months.

“That’s a fairly significant decrease,” said James McLawhorn, director of the Public Staff’s electric division.

Even the 3.4 percent of Wake County residents who heat with propane, known for its volatile price swings, are paying comparable costs this month to a year ago, and in many cases paying markedly less than in recent years. Propane costs are harder to gauge because the state’s several hundred independent distributors set their own prices, ranging from $1.64 a gallon to $4.33 a gallon statewide in the first week of November, but many are charging less now than they did a year ago. The sample costs are surveyed weekly by the N.C. State Energy Office.

Those pricing effects can be exaggerated by temperatures if the winter is unusually cold or warm. The South is projected to experience winter temperatures 18 percent colder than last winter, which was unusually warm. But even with the projected increase, temperatures this winter are still expected to be warmer than average, according to the U.S. Energy Information Administration.

Of course the heating bills each individual household will actually pay will depend on a host of factors: thermostat settings, square footage, insulation quality, and whether the home is exposed to sunlight or shade. So even if your rate goes down, you could end up paying more this year if you opt to go wild with your thermostat.

Electricity is the heating source for almost 63 percent of the state’s households, and about 54 percent in Wake County. However, about a third of the state is served by rural electric cooperatives and municipal power authorities, which set their own rates for their customers, or members.

Duke Energy Progress, the Duke Energy utility subsidiary based in Raleigh, has nearly 1.2 million residential customers in the state. Duke Energy Carolinas, the Duke subsidiary based in Charlotte, has nearly 1.7 million residential customers in the state.

Piedmont Natural Gas, also a subsidiary of Charlotte-based Duke Energy, has about 722,000 customers, of which about 656,000 are residential. PSNC has about 540,000 customers, of which about 496,000 are residential.

Behind those price changes lie explanations that are particular to each utility. For example, Piedmont is charging customers about 33 percent more for the natural gas itself – minus associated service and administrative costs – than it did throughout most of 2016.PSNC is charging the same price for fuel. By state law, Piedmont and PSNC can’t profit on the cost of fuel, but are required to pass the cost along to their customers.

PSNC, however, had a 4 percent base rate increase in November, which is the part of the monthly bill that’s separate from the cost of fuel, and covers the company’s overhead and expenses. Additionally, both Piedmont and PSNC under-collected some service-related expenses from their customers in the past year and are now making it up through increased costs, said Jan Larsen, who directs the Public Staff’s natural gas division.

Meanwhile, the two electric utilities overestimated costs in 2016 and are now refunding the money to their customers, McLawhorn said. Both electric utilities are also benefiting from lower prices for natural gas, which accounts for about 25 percent of Duke Energy’s fuel source. The other sources are 25 percent coal and about 50 percent nuclear.

It will be noted that these utilities are not paying the same prices for natural gas. The Duke Energy electric utilities are paying less this winter, PSNC is flat, and Piedmont is paying more. This is the result of corporate planning and risk management. These companies have teams dedicated to securing fuel commodities through complicated long-term contracts that lock in at different costs to hedge for price fluctuations.

This story was originally published November 7, 2016 at 6:26 PM with the headline "Winter heating costs falling for electricity customers, rising for natural gas users."