Sunday, November 16, 2008
News

Colder winter, higher heating costs ahead

“We’ll have more people applying for energy assistance than ever before.”—Tami Gerke, Atlanta Gas Light

By Charles W. Bryant

Prices for home heating are expected to go up nationwide this winter, according to the Department of Energy.

Natural gas users will likely shell out an extra $155 over the course of the cold months, or 18 percent more, at an average of $22 per month. Those who rely on propane may be handing Hank Hill about 11 percent more in payments than usual.
 
Electricity users get off relatively easy, with nationwide increases only expected to hit 10 percent.

Consumers who use oil to heat their homes, mainly in the Northeast, will be hit the hardest. Oil customers can look forward to paying about $449 extra this winter, 23 percent more than last year, for an average of $64 per month.  

The forecast for metro Atlanta and Georgia is on par with the national outlook. A colder winter is expected in 2008 as well, furthering the pinch customers will feel. Couple this with a struggling overall economy, and some Georgians may be in real trouble.

Most metro Atlanta residents heat their homes with natural gas. Since the deregulation of the industry in 1997, Georgians can shop around for the best rate plan. Rate plans are either fixed for a set period or vary from month to month. Locking in a plan when rates are low is the best option for savings, but that also means that if prices drop even lower down the road, you’ll miss out on the savings.

   Choosing your rate plan is a little like going to a casino wearing a blindfold.
 
According to the Georgia Public Service Commission, the lowest standard variable rate in Georgia for October was about $1.65 per therm (that’s a unit used to measure heat output), while the lowest fixed rate came to $2.27. But for November, the lowest variable rate fell to $1.28 per therm, with the fixed rate coming in at a slim 99 cents a pop. This is a good news/bad news scenario. While these prices are 10 to 18 percent higher compared to last winter, it’s a significant drop from the sky-high summer rates that reached a variable rate peak of $3 per therm in July.

       You might be thinking, “I thought gas prices of all kinds were really low right now. What gives?” While it’s true that natural gas supplies are reaching pre-Katrina highs, the gas you’ll use to heat your home this winter was purchased by suppliers last summer, when the rates were near historic highs. That cost is passed along to the consumer. It’s basically a delayed reaction.

“The demand this summer was high for gas for electrical generation, and there was also a high global demand,” explains Tami Gerke, a public relations specialist for Atlanta Gas Light. Natural gas prices have stabilized, she says, but don't expect to see any decrease in your monthly bill just yet. “Nobody can really predict that,” Gerke says. “Right now it’s a volatile situation. It depends on the economy and how cold our winter is.”

Even in comparatively warm Georgia, having adequate heat can mean the difference between life and death for seniors, children and sick people. The overall mortality rate increases by 15 percent in cold weather due to illnesses like hypothermia, pneumonia and influenza.

       In anticipation of a hard winter, last week President George W. Bush and Congress pulled together to release $5.1 billion in additional funds for the Low Income Home Energy Assistance Program (LIHEAP), which helps low-income households pay their heating bills. Gerke suggests that anyone who thinks they may need to enroll in LIHEAP should apply soon by calling 2-1-1 in metro Atlanta and Savannah or contacting their local Community Action Agency if they live outside the metro area.

“We’ll have more people applying for energy assistance than ever before,” she says.

       One segment of the heating industry that's often overlooked is firewood. Few customers rely on wood heating alone, but many augment their central heat with fireplaces and wood-burning stoves. A fire in the grate gives an especially cozy warmth, but this winter, it’ll cost you.

Bennett Butker, who operates the Wood Shed in Decatur, says that wood is about $20 more per cord—that’s a tightly packed bundle of wood logs—than it was a year ago. A 64 cubic-foot cord, the amount that a typical household will go through in a winter, runs $300 without delivery. Since Butker cuts and collects wood from April through the summer, gas prices last summer were the main factor behind the increased cost. 

“We sell more wood than everyone else in Atlanta combined,” Butker says. “But fuel prices were astronomical. It's been killing us.”

It also costs money to heat Butker’s building, a 2,000 square-foot warehouse off Scott Boulevard. The firewood industry is regulated by the state’s agricultural commissioner, Tommy Irvin, but the prices are set by what the market dictates. Like any product, it comes down to supply and demand.

   Customers looking to save some money should make efforts to winterize their homes. Adding weather stripping to drafty windows or extra insulation in the attic can go a long way toward reducing monthly utility bills. Of course, this costs you as well. But sometimes it costs money to save money. When you consider that Georgia residents spend 30 percent of their total energy bill on heating in the winter months, spending some money now on shoring up your household will pay off in the long run. And here’s another idea: You can always put on a sweater and turn down the thermostat.

According to Georgia Power, lowering the temperature by just one degree can save a household 3 percent in energy costs. Cranking up the heat to 70 degrees from 68 degrees increases cost by 6 percent. SP

To learn more, visit www.georgiapower.com/residential.
To set up a free energy assessment with Georgia Power, call 1-800-524-2421
To apply for LIHEAP, call 2-1-1.