PRESS RELEASE: Lower utility prices and a milder winter in the forecast

By Charles Crumm, The Oakland Press
POSTED: 11/28/15, 10:05 AM


During the frigid cold of the past two winters, Latoya Graham sometimes saw her heating bill spike to $200 a month.

Graham’s luckier than many. She lives in a newer energy efficient house in Pontiac built in 2009.

Even so, she has attended a winterization program through the Oakland Livingston Human Service Agency that teaches how to winterize a home.

OLHSA also offers assistance paying heating bills with money it raises from its annual Walk For Warmth. It is the weatherization agency for Oakland and Livingston counties. The state also offers heating assistance based on income, as do utility companies.

Graham said last winter’s heating bills weren’t as high as the year before, when temperatures were solidly below zero much of January.

“Last winter, it was between $80 and $120,” said Graham, a nurse and single mother.

But a warmer winter forecast and lower energy prices could mean lower heating bills for Graham and consumers across Michigan this winter.

Weather is the most important factor when considering consumption of winter heating fuels, according to the Michigan Public Service Commission, which regulates Michigan utilities.

“With the recurrence of a relatively strong el Niño this summer, Midwest winter forecasts are for a warmer than normal winter,” the MPSC’s winter forecast said. “According to the National Weather Service, Michigan has a 40-60 percent chance of a warmer than normal winter at the same time it is predicting that Michigan has a 40 percent chance of a drier than normal winter.”

In Michigan, the heating choices are natural gas, propane, heating oil, electricity and stoves.

NATURAL GAS

The majority of Michigan residents, an estimated 78 percent, heat their homes with natural gas, whether it’s through a natural gas company, like Consumers Energy, or an electricity company, like DTE Energy.

“As for natural gas, we’re anticipating a 13 percent decrease in the price that DTE pays for natural gas, which translates in an average $44 savings for customers over the November-March heating season,” DTE spokeswoman Vanessa Waters said.

Consumers Energy is more optimistic about the potential savings for homeowners this winter.

“We’re saying heating costs could be down more than 15 percent, based on a normal winter,” Consumers’ spokesman Brian Wheeler said. “The price we charge for natural gas is the lowest it has been since 2001. The price of natural gas itself is 60 percent lower than it was a decade ago.”

But ultimately, it depends on the weather.

“How much people use depends on how cold it turns out to be,” Wheeler said.

Consumers can compare natural gas prices at www.michigan.gov/comparemigas, a website from the Michigan Public Service Commission.

PROPANE

When propane prices spiked early in 2014 during brutally cold temperatures, allegations of price gouging followed.

Average prices in February 2014 peaked at $3.77 a gallon. That’s more than twice the average residential price of $1.72 a gallon reported earlier this month.

The average size for propane tanks is 250, 500 or a 1,000 gallons. The average homeowner can use anywhere from 500 to 1,200 gallons of propane a year, depending on the size of their homes, according to the industry.

Refilling a 500 tank in mid-winter was an expensive $1,885 proposition when propane prices peaked, if the tank was nearly empty – more than twice what it is today.

Joe Ross, public education manager for the Michigan Propane Gas Association, remembers that winter well.

Circumstances combined for the “perfect storm” that pushed propane prices high very quickly, including global and domestic demand, pipeline disruptions and frigid temperatures.

“We had record amounts of propane being sold around the world, upwards of 20 percent,” Ross said. “That just exacerbates prices here in America.

Domestically, a wetter than normal year boosted propane demand by farmers who use the gas to dry their crops.

“Then you add the ice-age temperatures and you have a perfect storm of things hitting the price of propane,” Ross said.

Propane prices, though more volatile than natural gas, aren’t likely to reach the highs that were hit early in 2014, said Joe Ross, public education manager for the Michigan Propane Gas Association.

In part, propane prices are volatile because it is a byproduct of natural gas and petroleum production.

But natural gas supplies are increasing while prices are also declining. Propane prices are falling along with them. “Everyone’s pointing to them (prices) being lower.” Ross said.

About 12 percent of Michigan homes use propane for heating, including some of the remaining rural areas in the developed counties in southeast Michigan.

OTHER HEATING SOURCES

The U.S. Energy Information Administration estimates about 6 percent of Michiganders heat their homes with electricity.

Heating with gas is typically cheaper and more efficient than electricity, according to the EIA. In Michigan residential electric prices are rising while natural gas and propane prices are falling.

Also used for heating is residential heating oil and wood stoves.

The price of residential heating oil, a petroleum byproduct, is also falling, though it’s not as inexpensive as propane.

Even so, the average residential price in Michigan this year is $2.70 a gallon, down from $3.71 a gallon in 2014. Its cost is projected to dip to $2.20 a gallon next year.

Heating with stoves that burn wood or pellets is a more complicated proposition since it involves the cost of the stove, which can be from $1,500 to $5,000. Whether it’s cheaper depends on how efficient the stove, the type of fuel and the cost of fuel compared to other heating sources.

Some sample formulas fare at http://energybible.com/bio_energy/comparing_fuel_costs.html to compare wood to heating oil, gas and other sources.

However, the Farmers Almanac makes its own comparisons of heating methods. It estimates that heating a 1,200-square-foot home from October through March would require:

• 4-6 cords of wood,

• 3-5 tons of wood or corn pellets,

• 800-1,000 gallons of heating oil,

• 400-600 gallons of propane, or

• 72 ccf (thousand cubic feet) of natural gas per month.

FURNACE CHECKUP

Despite a warmer than normal winter forecast, it’s still Michigan, and it’s still going to get cold.

Part of trimming heating costs is an inspection to make sure furnaces are in good working condition.

“It’s really something you want to do every year, especially if you have an older furnace,” said Tony Hulett, operations manager for Phil’s Home Services, formerly in Oakland County but now based in Sterling Heights.

Hulett ticks off a checklist of what a furnace inspection should look for:

“You’re checking to make sure there’s no carbon monoxide, you want to check the heat exchangers,” Hulett said. “You want to check the burners to make sure there’s no dust clogging so the gas can pass through.

“There’s a sensor that always gets cleaned. You’re also checking the motors,” he said. “We also check electrical connections. You want to make sure the electrical connections are all tight.”

Typically, he’s busy each September and October with furnace inspections, since they’re free to repeat customers. January and February are busy every year with cold-related service calls.

“Right around September to October, everybody wants their stuff checked out and cleaned,” Hewlett said. “Then it dies down until early January. From January until the middle of March we’re usually really busy.”

Read the article on The Oakland Press' website here.