How Will El Niño Affect My Winter Energy Bills?

How Will El Niño Affect Winter Electricity and Natural Gas Prices (and My Energy Bills)?

This year’s El Niño has been one of the strongest ones on record. Not only has it suppressed hurricanes in the Atlantic, it has also kept North America warm.

October 2015 was the warmest October on record since 1963 and the fourth warmest recorded nationally since 1893. It included record temperatures near 100° F (38° C) in the Northwest and national temperatures averaging 3.3° F above normal.

How Will El Niño Affect Winter Electricity and Natural Gas Prices (and My Energy Bills)?
It’s important to understand how the weather can and will impact your energy bills in the short- and long-term.

According to NOAA’s November 24, 2015 Weekly Weather and Crop Bulletin, average temperatures were up by at least 4° F in the Northeast, upper Midwest, and the Southeast. And the NOAA predicts a 33 to 60 percent chance the northern tier of states will see above-average temperatures continue through the North American winter.

The El Niño is predicted to reach its peak in December 2015 then gradually fade in late Spring or early Summer 2016. Naturally, a warmer winter means most folks will enjoy lower heating bills — except for Texas where El Niño brings cooler and wetter than average weather.

Why is this? One-third of US homes use electricity for heating. So right away, lower electric demand in most regions could keep electric rates tame. But there’s even better news. Since about half of all US homes rely on natural gas for heat (especially in the north), reduced gas demand will affect winter electricity and natural gas prices – and your energy bills.

Natural Gas is Electrifying!

Because it’s cleaner than coal and now costs less, more electric utilities burn natural gas to generate electricity. Following last fall’s low gas inventory and usage during the bitter 2014-2015 winter, natural gas production is the US has been breaking records.

In August 2015, monthly production hit a record high of 76.5 Bcf/day and by the end of the storage-injection season this fall, gas stocks rose to a record 4,000 Bcf. The US Energy Information Agency (EIA) November 10, 2015 Short Term Energy Outlook (STEO) predicts that natural gas production will rise by 4.7 Bcf/d (6.3 percent) in 2015 and then by 1.6 Bcf/d (2.0 percent) in 2016 as more wells and new pipelines are finished in the Marcellus play.

Compared to last year, much more natural gas is available. Prices are also low – $2.20/MMBTU on NYMEX and prices even lower on local city gates. Due to high amounts in storage and the moderate temperatures, these gas prices are expected to stay low through June 2016. Electric utilities will doubtlessly rely more on this cheap natural gas, particularly as they retire their aging coal fleet.

The Answer, My Friend…

How Will El Niño Affect Winter Electricity and Natural Gas Prices (and My Energy Bills)?
Don’t be perplexed by your next energy bill! Get informed, start saving, and be ready!

Indeed, the EIA is forecasting a 1.6 percent decline in winter residential retail sales of electricity due to warm weather. Not only can you and your neighbors expect lower heating bills this winter from warmer temperatures, you’ll also likely see energy providers lowering their prices in order to boost their sales against their competitors.

Unfortunately, when it comes to weather, change is the only constant. Above-average temperatures expected for the summer cooling season and utilities are expected to burn through natural gas supplies to meet demand. Natural gas prices are expected to rise to $3.50/MMBTU in August. For the meantime, it’s a buyer’s market for energy, but that window will close eventually.

If you’ve been thinking about changing providers or changing your plan, it’s time to start shopping around a long-term fixed-rate electricity plan – one that can save you some serious money on your winter energy bills this coming year.

About 

Vernon Trollinger is a writer with a background in home improvement, electronics, fiction writing, and archaeology. He now writes about green energy technology, home energy efficiency, the natural gas industry, and the electrical grid.