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MidAmerican Energy prepares customers for higher natural gas bills

MidAmerican Energy prepares customers for higher natural gas bills

By Bob Steenson,

MidAmerican Energy is warning customers that most of them will face higher monthly heating bills this winter because of higher natural gas prices, with some bills almost doubling.

“Based on the market prices for natural gas over the last month, residential customers in MidAmerican’s service area can likely expect their total bills to increase by 46-96%,” the company said in a press statement.

Actual bill impacts will vary by customer according to usage as temperatures get colder and market prices continue to fluctuate, the company said. The heating season is considered to run from November through March.

“Natural gas market prices have more than doubled from this time last year, as increased global demand coupled with both limited production and inventory have heavily increased the cost for MidAmerican to purchase the natural gas it delivers,” the company said.

The U.S. government on Wednesday said it expects households across the country to see their heating bills jump as much as 54% compared to last winter, according to reporting from The Associated Press.

Nearly half the homes in the U.S. use natural gas for heat, and they could pay an average $746 this winter, 30% more than a year ago, according to the prediction by the U.S. Energy Information Administration.

Those in the Midwest could get particularly pinched, with bills up an estimated 49%, and this could be the most expensive winter for natural-gas heated homes since 2008-2009.

The second-most used heating source for homes is electricity, making up 41% of the country, and those households could see a more modest 6% increase to $1,268, the U.S. report said.

Homes using heating oil, which make up 4% of the country, could see a 43% increase — more than $500 — to $1,734. The sharpest increases are likely for homes that use propane, which account for 5% of U.S. households.

This winter is forecast to be slightly colder across the country than last year. If true, that means people will likely be burning more fuel to keep warm, on top of paying more for each bit of it.

To make ends meet, families are cutting deeply. Nearly 22% of Americans had to reduce or forego expenses for basic necessities, such as medicine or food, to pay an energy bill in at least one of the last 12 months, according to a September survey by the U.S. Census Bureau.

“This is going to create significant hardship for people in the bottom third of the country,” said Mark Wolfe, executive director of the National Energy Assistance Directors’ Association. “You can tell them to cut back and try to turn down the heat at night, but many low-income families already do that. Energy was already unaffordable to them.”

Many of those families are just now getting through a hot summer where they faced high air-conditioning bills.

Despite higher prices, there shouldn’t be any heating fuel shortages this winter.

Peggi Allenback, MidAmerican vice president of market operations and supply, said, “We’re not seeing signs of supply challenges this winter, but we do expect to see higher customer bills because of higher commodity prices.”

The company said it tries to buy some of its natural gas in advance when prices are low, such as during the summer, then store it for use later, but even with those efforts, “we want our customers to understand that natural gas bills will still be higher this heating season,” Allenback said.

She said the company does not mark up the price it pays for natural gas, but passes the cost of the commodity straight through to customers.

Some customers are still paying higher prices as the result of the polar vortex last February that caused natural gas prices to spike.

“MidAmerican worked with state regulators to spread out those costs over a longer period of time than normal to reduce the financial impact to gas customers,” the company said. In Iowa, MidAmerican is spreading the costs from the February event through April 2022.

The company urged customers to consider using its budget billing service, which averages out seasonal prices so customers pay the same price every month, with the amount adjusted periodically to make sure it track with actual use.

The company also urged customers who are facing financial hardship to communicate with the company to discuss options and potential assistance, and to apply for aid through Iowa’s Low-Income Home Energy Assistance Program (LIHEAP) if they qualify.

The biggest reason for this winter’s higher heating bills is the recent surge in prices for energy commodities after they dropped to multi-year lows in 2020. Demand has simply grown faster than production as the economy roars back to life following shutdowns caused by the coronavirus, The Associated Press reported.

Natural gas in the United States, for example, has climbed to its highest price since 2014 and is up roughly 90% over the last year. The wholesale price of heating oil, meanwhile, has more than doubled in the last 12 months.

Another reason for the rise is how global the market for fuels has become. In Europe, strong demand and limited supplies have sent natural gas prices up more than 350% this year. That’s pushing some of the natural gas produced in the United States to head for ships bound for other countries, adding upward pressure on domestic prices as well.

The amount of natural gas in storage inventories is relatively low, according to Barclays analyst Amarpreet Singh. That means there’s less of a cushion heading into winter heating season.

MidAmerican Energy offered these tips to reduce energy use and keep bills down:

  • Set your thermostat as low as is comfortable and set it even cooler when you are sleeping, or consider a programmable or smart thermostat that can change settings automatically.
  • Have your furnace serviced once a year to ensure it’s working safely and efficiently. Clean or replace filters once a month or as recommended by the manufacturer.
  • The U.S. Department of Energy recommends setting your water heater to 120 degrees, which is not enough to cause scalding but is still hot enough to keep diseases at bay and is considered relatively energy efficient.
  • Locate and seal any leaks from your air ducts. Use weather stripping to help seal leaky windows and doors.
  • Check your insulation. Consider whether you need to add or replace your home’s insulation. Insulation reduces energy demand in both the winter and summer.
  • Close your curtains at night. During the day, open your south-facing curtains and shades to take advantage of the sunshine.

MidAmerican also offers a free online assessment tool called HomeCheck Online. Residential customers in Iowa who complete the assessment for the first time can receive a free energy efficiency kit, which includes energy-saving products that are easy to install.

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