With frigid temperatures, heating bills are skyrocketing. The price of natural is rising dramatically as demand increases for heating homes and businesses, and generating electricity.
Town of Walworth Sewer Superintendent Rob Burns was outraged and appalled when the Sewer Plant’s RG&E bill came in February. Their rate for electricity went from .074 per kilowatt hour in January to .15 per kilowatt hours in February….with no notice.
“Our bills in January were about $14,000 for the month and in February they were almost $27,000. How do you budget for that?”
He called RG&E to complain about the rate increase and lack of notification that rates would increase. After talking to RGE about the town bills he discovered what many do not realize. RGE rates did not change the rate for the delivery of the power, but the supplier’s price went up on the commodity portion of the town’s bills. 75% of their electric bill is the commodity portion.
A consumer has a right to choose their supplier of electric commodity. RG&E and NYSEG are the ones who deliver the product to you, not the ones who produce it. Their rate increases came back in 2009 through the PSC (Public Service Commission) and that is regulated (roughly 25% of the customer’s bill).
What is not stationery or constant is the commodity price, which comes from many sources at fixed or variable rates.
Bill Baker of Walworth, an Energy Consultant with KB Marketing Associates had seen the trend coming and had warned many of his clients, including Wayne Finger Lakes BOCES.
“Everyone will start experiencing electric supply cost increases in January and extending in February,” he wrote to BOCES last month. “This is due to two reasons: Coal fired power generation in the Northeast which was tied into the NYS power grid has been shut down and natural gas fire power generation has been turned on to replace it; and The price of Natural gas to the Northeast has jumped to near record highs for those gas fired power plants.”
The result, Baker noted, is that the electric bills will increase over 60% above this time last year (that is the total of supply and delivery billing). “Be prepared for some “electric shock”, he warned.
Gas costs were also higher this winter due to the frigid weather in January and February.
The problem with the warnings and now the actual huge increases, is that the budgets used to pay these monthly bills are not equipped to handle them.
“We saw over a 100% increase. You don’t just chalk that up to a fluctuating rate…it’s devastating,” said Rob Burns. “We thought that choosing a flexible rate would be the way to go, since we have seen times when our rates were lower that surrounding towns on fixed rates. But, it’s a ‘crap shoot’ really.”
Natural gas is cheaper than oil. Many downstate customers have dual-fuel heating systems – they can use natural gas or oil and many have switched their use to gas this winter.
What also really determines the increase is the commodity market. Sale of fuels like oil, and gas, are traded on the NYMEX (New York Mercantile Exchange) the same way that corn, gold, and silver are traded. Gas is a volatile commodity meaning its price is subject to rapid fluctuations much like the stock exchanges. Users of gas actually buy from Energy Service Companies who buy from investors.
Burns noted that he has learned that municipalities can bid for their fuel supply. This is something that the Town of Walworth will be looking into. “We will ride this out and hope for better weather and lower prices coming this Spring,” Burns said.