The American Gas Association is projecting that residential consumers could see a 9-11% increase in natural gas heating bills this winter, compared with the 2015-2016 heating season, although it stressed that those prices will still likely be about the fourth lowest in the last 10 years.
The trade association Wednesday released its winter heating season outlook, based on a survey of its member distribution companies as well as weather projections, gas prices and member comments about the forecast.
About 62% of AGA members responding to the survey expected normalized residential heating bills would be higher this winter compared with last, while about 38% did not. In the survey for the prior winter, 82% thought prices would likely go down.
On average, surveyed members predicted a 9.6% rise in bills, and a 6.6% boost in throughput, with those estimates representing averages weighted by a number of customers, AGA said. The survey results reflect views of about one-third of the gas market or about 20 million customers, according to AGA. "In general, we're still seeing natural gas as being the cheapest low-cost option for homes to heat this winter," said Brendan O'Brien, senior energy analyst at AGA. Winter heating bills still are likely to be about 28% below the 10-year high set during the winter of 2008-2009, he said.
AGA's prediction for increased consumer bills is about half the rise projected by the Energy Information Administration in its winter outlook released last week. EIA found households heating primarily with natural gas were likely to spend 22% more this winter compared with last winter.
EIA's forecast is tied to the prediction of heating degree-days from the National Oceanic and Atmospheric Administration, whereas AGA frames its forecast around what individual members see in their areas, noted Chris McGill, vice president of energy analysis and standards at AGA.
McGill said the trend line shows if there is anything near normal weather, consumption will rise compared with last year's levels, meaning bills will go up.
The peak-day consumption for all of the last three winters was higher than any year prior, he noted, with last year's coming in at 122 Bcf, in spite of the lack of a winter event to drive up consumption.
"That's a structural change. That's demand for electricity peaking on the winter heating season days where our customers are demanding natural gas load also ... . We're going to continue to see peakier peaks," he said.
The AGA outlook pointed to National Weather Service projections in the second half the year, in which the South would see warmer-than-normal weather, but the upper Midwest would be colder than normal. For the most part, the winter will be warmer overall across the nation, compared with the 30-year average, although still colder than last winter, leading to increased gas use, AGA said.
Henry Hub prices are higher now than they were a year ago, but 45% below the 2014 average in 2014, the group noted.
McGill said, nonetheless, that with "a market that's beginning to close down on this supply/demand overage that we've had," in the event that there are extreme pockets of cold, there is still the potential for temporary spikes in daily gas prices.
The Northeast in particular faces the same problem of prior years -- potential capacity constraints when peak load requirements coincide with power generation demand, with weather having a large influence, he said.
AGA Chief Operating Officer Lori Traweek said "there continues to be a need for the electric generators and the regulators to establish how they can ensure that they get the gas they need without negatively effecting the distribution of gas to the consumers," as well as to make sure that the infrastructure is in place to facilitate that.
