Electric bills spike in frigid weather

 

This winter’s frigid weather is bringing a nasty chill to New Yorkers’ utility bills.

Apparently worried that people will complain, Con Edison issued a news release Jan. 29 saying that it expects a typical customer will pay 21.6 percent more for electricity this January than in January 2013. A bill for 300 kilowatt hours will run to about $118 this month, a boost of $21, or 21.6 percent, over last year.

Heating customers will pay even more. Con Edison says bills for people with gas heat will run to about $388 for 300 therms in February, about $55 more than last year. Since it’s been colder this winter, someone who burned 300 therms of gas last year is probably burning a lot more than that this year, so their bills will be that much higher.

Of course this is a bummer. Nobody likes paying more. But the higher bills illustrate something about New York City’s electricity market: It depends a lot on the price of natural gas.

Wind and solar get headlines because lots of folks would like to see New York rely on them more. And nuclear is always in the news, especially with state government trying to figure out ways to shut down the Indian Point plants.

But natural gas is the biggest game in New York when it comes to electricity generation. Most of the state’s electricity is generated with natural gas. So when natural gas prices spike because of higher demand in cold weather, so do electricity prices.

This chart shows the per-kilowatt hour price of electricity for a Con Edison customer in New York City over the last four years. The red bars show the prices in June; the blue bars show the prices in December. These numbers are from the supply or commodity portion of the bills of a Con Ed customer who buys power directly from the company.

Per kilowatt hour rates for NYP&LNotice that in 2011 and 2012, the December price, represented by the blue bars, is a lot lower than the June price, represented in the red bars.

Then you’ll see that in December 2010 and December 2013 — periods of nasty winter weather — the supply prices were about the same as in June.

That’s different from the usual pattern in New York: Electricity prices tend to spike in the summer, when power-sucking air conditioners tax the power grid. New Yorkers usually pay lower prices in the winter, a time of year when we use less electricity.

This winter — and in the chilly winter of 2010/2011 — the usual rule doesn’t apply. Because electric generating plants rely on the same natural gas supply people use to heat their homes, electric bills spike in the winter too.

The chart only covers the cost of electricity itself. It doesn’t include Con Edison’s charges for delivering power to your home, which are a separate element of your bill. People who buy electricity from an energy service company might pay more or less than what this chart shows.

If you find the price fluctuations are a problem, you might want to think about Con Edison’s level payment plan. It differs from plans offered by energy service companies that guarantee supply prices – they might not be a good deal, since guarantees cost money.

About Bill Sanderson

I'm a New York-based journalist, and a former reporter at the Concord Monitor in New Hampshire, the Bergen Record in New Jersey, and the New York Post. My work has appeared in The Wall Street Journal, MarketWatch.com and Politico New York. Twitter: @wpsanderson.
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One thought on “Electric bills spike in frigid weather

  1. cathy burke says:

    Thanks for an explanation which, even if it doesn’t ease the financial pain, helps blunt the sticker shock.

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