NEBRASKA CITY – Industry officials told Nebraska City Rotarians Wednesday to expect energy bills to soar this winter as much as three times higher than in recent years.

Brad Hans of the NMPP Energy said rising electrical costs will accompany the 150 percent rise in the cost of natural gas.

Hans: “Natural gas and electricity pricing are pretty much tied at the hips.”

He credited the drilling technology called fracking for increasing supply of natural gas in the United States. He said the adequate supply provided stable pricing from 2014 to 2021, but now demand has been surging at a time when gas in storage is low.

He said U.S. natural gas storage was low at the end of last winter, but rather than prioritize domestic storage, a portion of U.S. natural gas is being used for electric generation and is being sold to buyers overseas.

Hans said the retirement of coal-fueled electrical power plants and Russia’s invasion of Ukraine are factors behind the surge of demand. While a  thermal unit of gas was selling last week at $5 in the United States, it was selling at $55 in Europe.

Hans: “So, what are you going to do if you’re a natural gas producer? Where do I want to sell my gas?”

Natural gas marketer John Bogatz of Teneska  said 15 percent of all natural gas produced in the United States was sent to the Gulf Coast and shipped away. Some forecast exports to double by 2030.

 

Hans said the price of natural gas lowered temporarily for Americans because exports were disrupted in June.

Hans: “We had a nice dip in pricing in the month of June because one of those export facilities had an explosion. What that did is it basically allowed us to have more supply stay in the U.S. and dampened our prices for about a month. And then we saw them shot back up.”

The Freeport LNG gas terminal in Texas was shut down about three weeks.

This winter, the average cost of home heating in the United States is expected to rise 17 percent. Natural gas prices are forecast at 66 percent higher than the winter of 2020.

Hans: “It’s not looking good for what’s coming this winter. .. Again, since gas roughly tripled from January 2021 to this past summer, so did electricity prices on the wholesale market.”

The cost of electricity purchased by Nebraska City Utilities was no higher than $30 from 2018 to 2020, but  has peak cost of $95 this year.

Hans said the good news is that Nebraska City Utilities has ownership in two power plants and a hydro-electric power allocation that is expected to moderate rate increases.

Jeff Kohrs of Nebraska City Utilities said heating costs should be higher this winter, but he hopes it does not reach three times higher as forecast.

Hans recommends weatherproofing homes and improving insulation.

Hans said natural gas was promoted as a transition fuel as the country moved from coal and nuclear to renewable energy like solar and wind. He said in some political climates, however,  the transition concept has been replaced with policies for immediate change.