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The Impact of Winter Energy Prices on Denton TX Electricity Bills

Sep 19

The Impact of Winter Energy Prices on Denton TX Electricity Bills

DENTON, 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. The war in Ukraine and the COVID-19 pandemic caused changes in the energy supply and demand patterns to lead to high energy prices. 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 when weather conditions are unpredictable, the EIA expects higher residential energy bills as the United States recovers from economic growth.

The EIA expects that nearly half the U.S. households that heat their homes primarily with natural-gas gas will spend 30% less than last winter. It is possible that they will spend 50% more if it's 10% colder than the average winter, or 22% more when it's 10% warmer than the average winter.

The 5% U.S. homes that heat solely with propane will spend 54% higher --94% greater in a colder winter, and 29% less in a warm winter.

Heating oil is used by 43% of U.S. households. They will pay 43% more to heat their homes in colder winters and 30% more for warmer winters.

Learn how to find the cheapest electricity rates in Denton at where you can easily compare and shop their electricity plans and rates.

The National Oceanic and Atmospheric Administration (NOAA), forecasts that a colder winter will be the basis of the EIA's expectations. 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.

This outlook is based on the definition of winter heating season, which the EIA uses as it falls between October and March. The average household winter energy consumptions, which are used to compare the recent winters, are broad measures that allow for comparisons. They include energy expenditures for all uses and not just heating. Individual households' fuel expenses depend on their size, energy efficiency, and temperature settings. Each fuel has its own market structure. Regulations, restrictions, and limitations can all affect the link between wholesale and retail market events.

To calculate the average winter energy usage in each region, we use our Residential Energy Consumption Survey. This report forecasts household expenditures for propane, heating oil, electricity and heating oil. We have divided households according to their primary space heating fuel. The winter forecast includes all heating fuels, not just heating. For instance, electricity used for appliances or lighting would be included in household heating primarily with electric electricity. Electricity has the most uses of all fuels. This means that it is less sensitive to temperature changes than other fuels.

In the United States, average prices for all fuels will be higher than during recent winters. Rising wholesale commodity prices of natural gas and crude oil are being passed onto retail prices. 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 resulted in falling inventories (in the case crude oil and a number of petroleum products) and inventories rising by less than historical averages during summer, such as the case with natural gas and propane.

Commodity price changes for petroleum products are quickly passed on to consumers. Brent crude oil spot prices on October 1 were $79 per barrel (b), up 51% over last winter's. This winter, we expect average retail prices for propane to increase by about 49% and heating oils to go up 33% compared to last year's.

According to NOAA's most recent winter forecast we expect temperatures for 2022-2023 to be slightly cooler than last winter's, but more like the average winter in the previous 10 year. Heating degree days (HDDs), which are used to measure how cold temperatures are, is compared to a base temperature. Higher HDDs mean colder temperatures. We anticipate 3% more HDDs (population-weighted) in the United States' winter of 2022-2023 than last winter. That is 1% more than the previous 10 winter average. The regional changes are consistent with last winter. We predict that HDDs will increase by 3% to 4 percent in the Northeast, Midwest and West this winter, as well as being about the same level as last winter.

Since weather is an important source of uncertainty in forecasts, the Winter Fuels Outlook includes scenarios that, as measured in HDDs (heat and cold differentials), all regions will be 10% or 10% below 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.

House heating costs can be affected by cold weather in two ways. It increases the amount required to maintain a temperature house at a particular level. Cold weather can lead to an increase in demand and disruptions in supply. This could be particularly 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.

The immediate effects of a colder winter on natural gas are more pronounced for 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.

The Impact of Winter Energy Prices on Denton TX Electricity Bills

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