Today’s round of questions, my smart-aleck replies and the real answers:
Question: I just noticed my Dominion natural gas rates are up close to 50 percent over last winter’s rates. Have seen no press on this. Quite an impact on my monthly budget. What’s going on?
My answer: Let’s just be thankful the city of Asheville is not in charge of natural gas delivery.
Real answer: As with just about everything you buy, natural gas prices have indeed increased of late.
“Natural gas bills are higher this heating season because the cost of natural gas is going up, like other commodities, because there is a rise in demand for natural gas domestically and abroad,” Persida Montanez, spokesperson for Dominion Energy, said via email. “Dominion Energy does not make a profit on the cost of gas component of rates, which is the majority of customers’ bills, as it is a direct pass-thru to customers.”
Montanez said natural gas costs have risen about 52 percent over last winter.
“Another factor to consider is colder weather, which drives up natural gas usage and consequently, bills,” she added. “In the warmer months for instance, customers are not using their natural gas furnaces/heating systems. Home heating significantly contributes to their natural gas bills.”
While I’m no expert on natural gas, other than, ahem, my own, I will offer a good tip here. Years ago, my wife and I, after getting some eye-popping winter-time heating bills, put our natural gas bill on a budget plan where you pay about the same amount every month, an average of your overall usage.
That way you know what the bill is going to be every month.
Going back to the question, the North Carolina Utilities Commission sets gas rates the utility can charge. Dominion has 637,000 natural gas customers in North Carolina and 73,000 in Western North Carolina.
Dominion’s rates went up last year, with state regulators approving a 5.1 percent rate increase for Dominion Energy natural gas customers on Jan. 21, 2022, as reported by the Charlotte Business Journal. The rates were made retroactive to November 2021.
“The rates are based on a compromise worked out in October (2021) by Dominion and the N.C. Utilities Commission’s Public Staff, charged with protecting utility customer interests,” the Journal reported.
On the customer bill front, some relief is on the way.
“While the cost of gas has been higher than in prior years, the NCUC issued an order approving a recent cost of gas decrease that became effective on Dec. 1,” Montanez said. “The recent cost of gas change is an approximately 3.96 percent decrease to the average residential customer’s bill.”
You read that right — your bill should go down some (unless of course we have another arctic freeze and your heat is running constantly). Montanez pointed out that the typical winter heating season bill is around $80.
“The good news is that customers should see an approximately $6 bill reduction moving forward due to the cost of gas decrease that became effective on Dec. 1,” she said.
But for the entire winter season, you’re going to pay more than last year.
In October, the U.S. Energy Information Administration issued its “Winter Fuels Outlook,” forecasting “that U.S. households that primarily use natural gas for space heating will spend an average of $931 on heating this winter (October – March), which is 28 percent (or $206) more than last year.”
The Administration noted that natural gas is the primary heating fuel for 47 percent of homes, citing U.S. Census Bureau data. Natural gas retail prices and the amount of natural gas consumed determine what households spend on their gas bills.
“This winter, higher retail natural gas prices are the main driver for the expected increase in natural gas bills,” the EIA said in the report. “On average, we expect retail natural gas prices to rise 22 percent, from $13.02 per thousand cubic feet last winter to $15.95/Mcf this winter.”
James S. McLawhorn, director of the Energy Division at the state Utilities Commission, Public Staff, said the commission has to approve all rate changes. In North Carolina, Dominion does business as PSNC Energy.
“I’m a PSNC customer myself, and my bill went up 45 percent,” McLawhorn told me.
He confirmed that PSNC is a “total pass-through” on natural gas, meaning it does not make money on the gas itself. The utility makes its money by charging for the infrastructure that brings that gas to your house.
“The local companies, like PSNC and Piedmont, all they do is deliver the gas,” McLawhorn said. “They don’t produce the gas or set the price. So they are somewhat captive to what the gas producers charge.”
Those companies do buy “hedges” to help mitigate increases in gas prices, securing a set price on a monthly basis in the future. PSNC had a lot of lower cost hedges in place for quite a while, and that helped mitigate some of the increased gas cost in the marketplace, McLawhorn said.
“Then when they ran out, they were more subjected to the effects of the current market,” he said. “So the bill cost did go up significantly.”
With market prices escalating, newer hedges cost more, so it’s tougher to mitigate prices the customer sees.
Montanez noted that Dominion doubled its contribution to its bill assistance program, launched an income-eligible home weatherization program, and has “various programs like budget billing that can help the customers manage their bill.”
That’s what I was referring to earlier. It’s definitely helpful.
If you’re interested in any of the programs, you can follow the links above, visit DominionEnergyNC.com or call Dominion’s customer service line 877-776-2427.
Got a question? Send it to John Boyle at firstname.lastname@example.org or (828)-337-0941.