Lancaster County residents who use natural gas and electricity to heat their homes won’t have certainty about their winter energy costs until Dec. 1, but increases seem inevitable.
Meanwhile, those who depend on heating oil are already contending with a 74% per gallon price increase in Pennsylvania since last year, according to the U.S. Energy Information Administration.
Overall, EIA predicts in its 2022-2023 Winter Fuels Outlook released this month that the average home nationwide heating with electricity will see a 10% increase in costs this year compared to last, rising to a total bill of $1,358 for this winter heating season – October through March. The average home heating with natural gas will see a 28% increase in its heating costs this year compared to last, rising to $931.
Natural gas is the second most popular home-heating fuel in Lancaster County, used by 33.7% of county households, per the U.S. Census Bureau’s American Community Survey. It trails only electricity, used to provide heat in 34.5% of all housing units in the county. The survey does not measure heating oil use at the county level, but EIA reports that 4% of homes nationwide – primarily in the northeast - use it as the primary source of heating.
It is too soon to say how much electricity bills could go up on Dec. 1, a date when every utility in Pennsylvania can change its Price To Compare – which is the cost of generating electricity that the utilities pass on to customers without any mark up.
“We are still awaiting details on the December PTC changes,” Pennsylvania Public Utility Commission Press Secretary Nils Hagen-Frederiksen wrote Tuesday in an email exchange with LNP| LancasterOnline. “That date is a reset date for every electric utility in the state, so we monitor it closely and alert consumers as soon as we have those details.”
PPL reveals its plan Nov. 1, Regional Affairs Director Maggie Sheely wrote Tuesday in an email exchange with LNP|LancasterOnline.
Any Price to Compare rate change by PPL - Lancaster County’s primary electricity supplier with about 227,000 customers - will come on the heels of a 38% increase June 1. That increase occurred as utilities struggled with surging prices for natural gas, which is used to generate electricity, as well as inflation across the economy. PPL’s increase was on the high end of the electricity rate hikes across the state in June, but it wasn’t the highest. West Penn Power’s residential rate shot up 44.6% at that time.
That hike left PPL’s rate at its highest level in more than a decade, according to LNP | LancasterOnline files. For a customer using an average of 1,000 kWhs of electricity per month, the hike added $34 to their bill
Met-Ed, with about 2,200 Lancaster County customers, upped its residential Price to Compare rate by 16.1% June 1 and 18.4% on Sept. 1.
PPL is one of the few electric utilities that resets its energy prices every six months instead of quarterly.
UGI – the primary natural gas supplier in Lancaster County with 63,000 residential customers – projected in June a 5.3% increase Dec. 1 in its Purchased Gas Cost rate, which represents the cost of natural gas and is passed on directly to the customer without a mark-up.
It is too soon to say if that projection will hold, UGI Media Relations Manager Joe Swope indicated in an email exchange with LNP | LancasterOnline on on Tuesday.
UGI’s last increase due to rising gas costs was 7.4% June 1.
UGI was also granted a two-step base rate hike by the PUC in September that is about 40% less than the utility requested.
As a result of the base rate bumps, the average bill for a residential customer using 73.1 cubic feet (Ccf) per month of natural gas will increase from a current bill of $92.49 per month to $96.93, effective Oct. 29, and rise to $98.21, effective Oct. 1, 2023, according to the PUC.
The base rate – which allows a utility to recoup the expense of operating its system plus a return – comprises about 65% of a customer’s bill. The Purchased Gas Cost rate is about 35%, although those percentages can fluctuate when wholesale prices for natural gas go up or down.
EIA predicts in its Winter Fuels Outlook the average household nationwide using heating oil as its primary fuel for space heating will spend an average of 27% more this winter – for a total cost of $2,354 – than last winter.
However, average per gallon prices on the East Coast and Pennsylvania prices in October compared to last October are well above 27%.
The U.S. average price per gallon of residential heating oil on the East Coast on Oct. 10 was $5.38, up $2.09, or 63%, from a year ago. The same numbers for Pennsylvania were $5.43, up $2.31, or 74%.
A sampling of Lancaster County heating oil retailers showed prices ranging between $5.55 and $5.79 per gallon Tuesday, although discounts were available for large orders.
Two Lancaster County suppliers said customers concerned about prices hikes had jumped into their special programs that cap per gallon prices for a set period of time.
Keith Reitz, who owns East Hempfield Township-based Reitz Oil Co., said his business serves about 2,700 customers in Lancaster County and 10% of his customers took advantage of a program this year that capped the price they paid for 12 months. He said the program sold out in 30 days when it was offered in July.
“It is very hard to guide customers and ourselves as to what is the best-case scenario for everybody,” Reitz said of dealing with the fluctuating oil prices.
Steve Bridges, director of operations of Sauder Fuels in Adamstown, said energy prices are very volatile, citing a short supply in the market and world events that are impacting the petroleum markets.
“As we head into winter, we’re urging customers to make sure they are on automatic delivery schedules, as you don’t want to get into an unfortunate situation of not having priority delivery with your supplier,” he said.
Like Reitz, Bridges also mentioned a cap program offered to his customers.
“We are seeing more demand than ever for the cap program,” he said. “If the price in the market goes up past the cap price, you never pay more than the cap. “If the market drops, you have the chance to get a lower price. It’s the best pf both worlds.”
What’s going on here?
Energy market disruptions caused by the Russian invasion of Ukraine and sanctions against Russia have influenced prices, the EIA notes.
In short, there is a smaller supply of energy available while needs have not decreased. Natural gas is the primary driver as it is used both directly to heat as well as used to generate electricity.
And it’s no secret that inflation across the economy has driven up operating costs for all businesses, not just those in the energy sector.
In addition, production capacity on the east coast has played a role in higher heating oil and diesel fuel prices. “Although refineries on the East Coast are running at high utilization, regional refining capacity is at its lowest in recent history,” EIA reported in its Oct. 13 petroleum update “In 2019, the Philadelphia Energy Solutions refinery shut down permanently following a fire. From January through September 2022, while utilization of existing capacity was high, net production of distillate (heating oil and diesel) fuel oil by East Coast refiners was only 76% of the five-year average.”
Editor Alejandro Rios contributed to this story.