Fort Worth TX Electricity Bills and Winter Energy Prices

FORT WORTH, TEXAS - September 20, 2022 - Texas Electricity Ratings

As we head into winter 2022-23, energy retail prices in the United States have reached or are close to multi-year records. These high prices result from changes in energy demand and supply patterns that have been triggered by the war in Ukraine and the COVID-19 pandemic. We anticipate that Americans will spend more this winter on energy than in previous years due to higher energy prices. Also, it is likely that there will be a milder winter in some parts of the United States.

Even though weather predictions can be unpredictable, the EIA expects an increase in energy prices this winter as the United States resumes economic growth. This will lead to higher residential energy costs.

The EIA predicts that nearly half of U.S. households that heat with natural gas will spend 30% more this winter than last year. This is if it is 10% colder than average and 22% if it is 10% warmer.

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Based on NOAA's forecasts, the EIA expects a colder winter. NOAA's expectations are key inputs into the EIA energy consumption forecasts and contribute to their expectation that winter will see an increase in energy consumption.

To provide this outlook, the winter heating period is defined as being between October-March. This supplement's average household winter energy expenses is a broad measure of recent winters. It does not include heating, but all energy costs. Individual household fuel costs depend on the size and energy efficiency and other factors such as weather and thermostat settings. Each fuel also has its market structure, physical infrastructure and regulations that can impact the connection between wholesale markets and retail markets.

In the United States, average prices for all fuels will be higher than during recent winters. Retail prices are rising due to higher wholesale commodity prices for natural and crude oil. We can attribute price increases over this past year to many factors. However, the main reason wholesale commodity prices for natural gas, crude oils, and petroleum products have risen in the past year is that fuel demand has increased faster than production. This has led to falling inventories in crude oil and other petroleum products and inventories increasing less during summer than historical averages in natural gas or propane.

Petroleum products have the advantage of commodity price changes being quickly passed onto consumers. Brent crude oil spot prices in October were $79/barrel (b), an increase of 51% from last Winter's average. This winter we expect propane prices to be approximately 49% higher, and heating oil prices will be 33% more than last winter.

Because commodities price movements have an effect on residential prices for natural gases and, especially, electricity prices, it can take a while before these prices change. Regulated rates include these costs. Even with a lag in price increases, spot commodity prices have increased over the last year pushing up retail prices this Winter. Henry Hub natural-gas spot prices were 5.61 British thermal units (MMBtu), which was 84% more than the average last winter. This price increase is contributing to our forecast for residential natural gas prices this Winter will be 27% lower than last Winter and residential electricity pricing will be 5% above last winter.

According to NOAA's latest winter forecast, temperatures in 2022-2023 will likely be slightly lower than the last winter for most of the country. However, they will still be similar to the average winter over the past 10 years. Heater degree days (HDDs), a measure of cold temperatures, are used in comparison to a baseline temperature. More HDDs indicates colder temperatures. We expect to see 3% more population-weighted HDDs in the winter 2022-23 than we did last winter, and 1% more over the 10-year average. There are no notable changes to the last winter's regional trends. We expect that the Northeast and Midwest will have between 3% and 4% more HDDs than winter 2020-21. The South will see about the same amount of HDDs as last winter.

These forecasts are subject to significant uncertainty due to weather. Therefore, the Winter Fuels Outlook contains scenarios where all regions are 10 % or more cold than the baseline forecast. Last year's experience showed that even in a mild winter, severe disruptions to energy markets can happen. A cold snap that struck Texas in February caused severe disruptions to energy supply and affected many parts of the country. These weather events are not always expected, but the high prices and low inventories across a variety of fuels mean that even brief periods of severe weather can have an impact on energy markets.

The cold weather can cause household heating bills to rise in two ways. It increases the amount required to maintain a temperature house at a particular level. It raises demand, which can lead to supply disruptions. Second, it can also cause energy prices and fuel prices to rise. This can be especially acute during low fuel inventories.

While this effect can be seen across all fuels it is likely to be most severe for propane. Because propane wholesale-to–retail price transfer occurs quickly, and cold weather has the potential to significantly impact market dynamics as well as prices. In the Midwest, where propane supply problems have been a problem in the past, we anticipate that propane retail prices will be approximately 12% higher in a 10% colder than forecast scenario. Additionally, households will consume 12% more propane. This would result in propane expenditures that are 26% greater than our base case.

However, for natural gas, the immediate effects from a cold winter are more on the consumption side. If the temperature is 10% lower than forecast, U.S. natural gasoline retail prices would rise by 2%, and 13% more people would consume it. This would lead to 15% more spending than in our base scenario.

Fort Worth TX Electricity Bills and Winter Energy Prices

Texas Electricity Ratings - Dallas, Texas

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