Natural gas shortage drives up Coloradans' winter energy bills

Matt Whittaker

By Matt Whittaker / Denver NewsBreak

(Across Colorado) Coloradans are likely to see sharply higher energy bills this winter despite the recent warm temperatures as global demand for natural gas outstrips supply.

The Colorado Public Utilities Commission has been gathering information since November about potential customer bill increases.

Two factors will help push Colorado customers’ costs higher: 

  • National and global gas price increases 
  • Efforts to recoup higher costs utilities that serve Colorado had to pay for natural gas in February. 

“Across the country, natural gas commodity prices have risen during the economic recovery, and this is the primary factor affecting consumer heating bills,” the commission said Wednesday. “Therefore, despite mild winter weather curbing demand, prices are still substantially higher than this time last year.”

How much extra customers might spend

Xcel Energy, Atmos Energy Corp., Colorado Natural Gas, and Black Hills Colorado Gas, in a series of filings with the commission on Nov. 24 projected what rates might do on March 1 compared with the same date in 2021.

The average Xcel residential customer could see an increase of 57% on their bill, even excluding the Winter Storm Uri recovery charge, which won’t start for Xcel customers until April. The March 2022 bill without that rider could be $116.52 compared with $74.13, the company originally estimated.

After the November filing, natural gas prices, which can be volatile, declined, resulting in the company revising its estimates to $86.50 for March 2022 compared with $64.01 the prior year, an increase of more than 35%, the company said in a December filing with the commission.

Monthly average residential bills for November through March could total $489.32 in 2021-2022 compared with $356.46 the prior year, an increase of more than 37%, Xcel said in the filing this month. 

The “largest cause of average bill increases this winter are associated with natural gas commodity prices,” Xcel said.

In its November filing, Atmos Energy said its residential customers could see a 34% increase in their March bills, up to $71.41 from $53.45, including the Uri recovery money.

Depending on where they live, Colorado Natural Gas residential customers could see March bill increases between 15.62% and 48.25%, including the proposed Uri recovery money, the company said in its November filing.

Black Hills Colorado Gas said the statewide average for its residential customers in March could rise to $111.48 from $73.84 the year prior, a jump of more than 51% that includes the proposed recovery from Winter Storm Uri, the company said in its November filing. 

Those three companies have not updated their figures with the commission based on the recent easing of natural gas prices.

Why have natural gas prices been rising?

In February, the month of Winter Storm Uri, natural gas traded on the New York Mercantile Exchange hit a peak near $3.22 per million British thermal. By October, prices were above $6. Recently, they’ve dipped back below $4 amid the warm start to winter in the United States.

Still, natural gas prices are higher than they were in February as the worldwide economic recovery from the pandemic generates more demand for natural gas to power businesses and homes. At the same time, supply hasn’t recovered, partly because there is less drilling for oil, which is often pumped alongside natural gas.

Meanwhile, a cold winter and flagging production from wind farms during the summer boosted demand for natural gas in Europe, and hot weather and a move away from coal in Asia had the same effect there. 

Prices abroad are generally much higher than they are in the United States, which thanks to the shale fracking boom, is the largest producer of natural gas in the world. That price difference has foreign companies eager to buy natural gas in liquid form from U.S. exporters, helping keep the domestic supply tight. 

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Matt Whittaker writes about natural resources industries, including oil and gas, mining, renewable energy, agriculture and cannabis. He's been based in the Denver metro area since 2013. You can follow him on Twitter @mattswhittaker.

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