Nov. 19—Gas- and electric-heated homes may see very different bills this winter.
For several weeks, Black Hills Energy (BHE) Company has been warning customers to expect higher gas bills this winter.
It comes down to how a building is heated. BHE customers use natural gas for heat, while others rely on public power districts to provide electric heat.
Public power districts set power rates at the beginning of the year, and those rates do not change throughout the year.
"The amount of an electric bill (including lighting, heating with a heat pump, electric stove, etc.) will be determined by how many kilowatt hours that are used — not the rate," Nebraska Public Power District Corporate and Media Services Supervisor Mark Becker said in a Nov. 16 email to the Telegram. "...(The) set electric rate charge ... would not change due to colder than normal weather conditions."
If someone uses more electricity to heat their home in the winter, their bill will be higher, but only because they are using more electricity — not because the price per unit has gone up.
BHE works a little differently.
"Black Hills Energy buys natural gas from suppliers including interstate pipeline companies who provide natural gas to our local distribution system," BHE's Brandy Johnson said in a Nov. 5 email to the Telegram.
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Typically, as demand goes up, so does the value — and therefore the cost — of natural gas. When it's colder, demand is higher.
"The cost of natural gas is often the largest portion of our customers' bills during the winter heating season," Johnson said.
But that's not the end of the story this year. BHE customers may see higher bills this winter because of natural gas commodity cost increases, which in turn drive up the price-per-unit of the natural gas that is used to heat homes and businesses.
Johnson said the cost of natural gas is a "pass-through" cost for BHE.
A pass-through cost is when a component cost — like lumber for construction, or natural gas for BHE customers — is passed on to the end-buyer. When BHE has to pay more to purchase natural gas from suppliers, it raises the price of natural gas for its customers accordingly. On one hand, it means BHE isn't making money off of increased natural gas prices — on the other hand, it means that BHE does not absorb cost increases for its customers.
"While there are a wide range of national and even global market factors that impact the cost of natural gas, two nationwide factors we're currently focused on are storage inventory levels and the increased use of natural gas-fired generation related to the warmer-than-typical summer temperatures," Johnson said.
Johnson described the current natural gas marketplace as more dynamic than in recent years.
"Black Hills Energy is aware of and closely monitoring the natural gas market environment, including current and forecasted prices of natural gas," Johnson said. "...We recognize the impact that cost increases have on our customers."
Johnson encouraged customers who are struggling to pay their bills to reach out to BHE's customer service team.
"Since the beginning of 2020, we've provided increased energy assistance funding support for income-qualified customers in partnership with not-for-profit organizations," Johnson said.
In particular, Johnson noted BHE's budget billing and energy assistance programs. As always, conservation and energy efficiency will be customers' friends.
Molly Hunter is a reporter for The Columbus Telegram. Reach her via email at email@example.com.
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