Michigan heating costs should be milder this winter
Heating bills for Michigan residents should be lower this winter because the deep freeze that chilled much of the nation last year is unlikely to return. And prices for propane gas and heating oil should be considerably more affordable than during last year’s brutal winter.
Last year, persistently low temperatures that blasted Michigan and other parts of the country forced homeowners to crank up the heat. High demand for heating fuels jacked up prices, especially for propane. Bills soared.
This year, milder temperatures should reduce homeowners’ fuel use across the nation, according to the Energy Department’s annual prediction of winter heating costs. “Temperatures are forecast to be warmer than last winter, and that means less demand for heat,” said Adam Sieminski, administrator of the Energy Department’s Energy Information Administration.
According to the report, propane and heating oil prices should be down significantly. Electricity prices are expected to be higher. And although the price of natural gas is expected to rise nationwide, in Michigan it should be comparable to last winter.
Temperatures in the Midwest are forecast to be 16 percent warmer than last winter, according to the report. However, at least one weather commodity forecasting firm warns that atmospheric conditions that brought about last year’s harsh winter still remain.
Judy Palnau, spokeswoman for the Michigan Department of Licensing and Regulatory Affairs, said the EIA’s report is used to help determine the state-specific forecast for winter heating costs. That report will not be coming out until the end of October at the soonest, she said.
Dan Bishop, spokesman for Consumers Energy, says customers should find that natural gas costs are comparable with last year’s prices or even lower, somewhere around $5 per thousand cubic feet.
While the rest of the country is dealing with the drain on natural gas from last winter, Michigan is in a special situation, Bishop said. Consumers Energy has 15 natural-gas storage fields in Metro Detroit and west Michigan, allowing the utility to store resources ahead of time.
“We buy gas in the warmer months when costs are lower,” Bishop said. “In the coldest days of winter, about 80 percent of the gas delivered to customers comes from underground storage. This protects customers from having to buy gas at peak prices.”
DTE Energy spokeswoman Erica Donerson said natural gas rates are holding steady at $4.97 per thousand cubic feet, about the same as last winter. That’s down 24 percent from the rates three years ago. Again, lower usage should equate to lower costs to Michigan consumers overall.
Those prices seem an absolute bargain when compared with the Northeast: Natural gas customers there will see a rise of 6.8 percent, to $12.42 per 1,000 cubic feet, the highest in the country, according to the Energy Department.
The average natural gas bill nationwide for the October-to-March heating season is expected to fall, to $649 from $680 last year, because customers are expected to use less. Natural gas remains the cheapest heating fuel by far.
Last year’s brutal winter taught propane users a lesson: The Michigan Propane Association says record numbers of homeowners made plans for propane delivery over the summer, which should alleviate some scrambling when the weather gets colder and prices rise.
“The propane industry is trying to teach consumers that propane is a lot like produce,” said Joe Ross, spokesman for the association. “Pick it up when it’s the cheapest.”
Michigan propane retailers have increased storage capacity as a way to offset spikes in demand, Ross said.
The Energy Department says propane supplies going into this winter are higher than at any time since at least 1993 and demand is expected to be lower. That will lead to an average price of $1.99 per gallon in the Midwest, down 24 percent from last year’s record average of $2.61.
Propane customers in the Midwest will pay an average of $1,500 to heat their homes this winter, a savings of $767.
Heating oil customers will get a big break on their bills because of lower consumption and lower prices.
Lower global crude oil prices are helping push heating oil prices to their lowest level in four years. The Energy Department predicts the average price will be $3.63 per gallon, down from $3.88 last year.
Only 5 percent of U.S. households use heating oil. They will pay $1,992 on average, $362 less than last year.
Electricity prices are heavily influenced by natural gas prices, so they’re on the rise. But electricity customers should use less this winter, resulting in lower heating bills for many.
Average bills are expected to fall nationwide, to $938 from $955, according to the Energy Department. Thirty-nine percent of U.S. customers — many of them in the South — heat with electricity.
DTE expects its electric rates to remain on par with last year’s rates. In January, the average customer saw a 6.5 percent reduction on their electric bills compared to the same month the prior year.
Even though it looks like homeowners will spend less on heating this winter, it’s probably not wise to spend those hoped-for savings just yet, says Matt Rodgers of Commodity Weather Group, which forecasts weather and heating demand for energy companies.
The warm water in the North Pacific that helped push polar air south into the U.S. still remains, he says. There is also more moisture in the jet stream thanks to warmer water in the tropical Pacific that could generate more East Coast and Southeast snow.
The EIA, using forecasts from the National Oceanic and Atmospheric Administration, predicts the number of heating degree days — a measure of heating demand — will fall 12 percent this year.
Associated Press contributed.
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