What Will My Electricity Bill Look Like This Winter?

By Vernon Trollinger, November 16, 2012, Energy Efficiency, News

If you’re about to read my Natural Gas & Winter Weather Predictions for 2013 Texas Electricity then STOP!

There’s been an “If-failure”.

The information in that post came from NOAA’s October 1 forecast. I wrote: ” …[I]f the NOAA weather prognostications for a warmer than average winter are accurate, then heating demand will be low and natural gas prices might hover between $2.90 and $3.30 per MMBtu over the winter.”

It seems the weather’s going to be colder. The image to the right is NOAA’s Oct 18th Three month Nov-Dec-Jan temperature outlook.

An issue has been whether or not a neutral or weak El Niño is going to form in the Pacific. On October 1, NOAA predicted that “a marginal El Niño would briefly occur and that “ENSO-neutral conditions in Northern Hemisphere winter after a short period of marginal El Niño conditions”.

But that has changed. NOAA posted an updated three month forecast on October 18:

“Borderline ENSO-neutral-weak El Niño conditions prevailed across the equatorial Pacific Ocean during September. The sea surface temperature (SST) anomaly pattern, which only a month earlier showed mostly above-normal along the central and eastern equatorial Pacific, has weakened considerably.”

For North America, that means the expected warm winter air will linger in the west leaving the upper Midwest, Texas, and the east coast with even chances for “normal” winter temperatures. Florida, however, can expect somewhat colder temperatures. These warmer temperatures are expected to drift eastwards from January through April.

Precipitation will be within statistical norms but with the Gulf Coast having a chance for above average amounts. The Midwest drought is expected to abate.

NOAA’s next long range forecast is due out on November 15.

So what does this mean when you look at your Texas energy or Pennsylvania power rates?

Currently, 47.4% of Texas electricity is generated by natural gas (Texas is also the first State to reach 10,000 megawatts of wind capacity). That’s nearly half. Pennsylvania and other northern states mostly use natural gas for heat, relying mostly on coal for power generation. That is about to change, though, with the recent approval of Pennsylvania’s first natural gas generator station in Williamsport, which will be powered by natural gas from the Marcellus Shale. However, there are other natural gas generators in the northeast region and the PJM Interconnection RTO.

Currently, natural gas supply is huge. EIA’s Natural Gas Weekly reported, “Working natural gas in storage increased to 3,908 Bcf as of Friday, October 26, according to EIA’s WNGSR, the highest recorded volume since EIA began keeping records.”

Normal winter temperatures in northern states could put a good dent in natural gas supplies and increase prices. The EIA’s Short Term Energy Outlook (STEO) predicts that home expenditures for heating oil and natural gas will increase this year between 5 and 15% compared to last winter. In other words, “20 percent to 27 percent colder” —which is very bad news for parts of the northeast where the recovery from Sandy is expected to take months.

But the size of the dent depends on two more “If’s”.

One is the weather (yes…again). If cold temps move in early (November through December) but moderate from January to April as the current forecast projects, prices will spike but slide afterwards. With supplies so high, that price spike might mean only a few cents. If there’s a protracted and bitter cold snap, prices could spike higher, but the upshot is that it’s not as likely to last long.

The other “If” depends on if the construction of new pipelines linking natural gas wells in the Marcellus plays to the main supply lines. According to Reuters, “About ten projects coming online in the next three months alone will add an extra 3 billion cubic feet per day (Bcf/d) of pipeline capacity, according to government data. Another 5 bcfd of projects are in the works for 2013, at least.” That means amounts of working natural gas in storage could go even higher and lower the price.

So based on this information, it’s likely that both Texas energy and Pennsylvania power consumers will see briefly higher bills early this winter due to higher generation costs and their own higher usage. Later in January and moving into April, these amounts should fall —assuming there’s not another mis-“IF”-fire.

Still, it is interesting to note that even with the change in the weather forecast, the EIA still predicts natural gas prices to average $3.35 per MMBtu for 2012.

For more information on how you can lower your bill, check out this video:

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