Heating Prices Hit 7-year Low, in Contrast to Higher Electric Bills

As furnaces kick into gear in this cold weather,  consumers will get a break on their heating bills. Natural gas rates for December have dipped to a low of 46 cents per therm, a price not seen since 2002, according to the Northern Illinois Gas Corp. (NICOR)

That stands in contrast to the higher electricity rates consumers have seen this year. ComEd rates went up about 12 percent in the spring, and most of its customers saw the impact of that on their electric bills starting in June, said ComEd spokeswoman Alicia Zatkowski. 

"It was a hot summer, so a lot of customers really noticed that on their bills," Zatkowski said, explaining that a greater need for air conditioning, which uses significant amounts of electricity, combined with the rate increase made summer 2010 electric bills higher than those of summer 2009, which was a cooler summer.

The mild weather of September, October  and November is one of the factors keeping natural gas prices low right now, said Annette Martinez, a NICOR spokesperson. 

"With gas costs, it's about supply and demand," she said. "There's supply out there, and the demand hasn't been very high. So we've got gas prices from seven years ago, which is good news."

She declined to predict what natural gas rates would do further into the winter.

"If the weather gets really cold, prices could go up," she said. "We tell customers to do things you can do to prepare, such as join the NICOR budget plan and implement no-cost and low-cost measures."

Those include installing and using a programmable thermostat, opening curtains during the day and closing them at night, and using insulation and weatherstripping.

About 70 to 75 percent of customers' NICOR bills reflect the price of the natural gas itself, and NICOR simply bills its own costs for the gas without taking a profit, she said. Fifteen to 20 percent of customers' heating bills reflect the cost of delivery, which is where NICOR, a regulated utility, makes its money, she said. The remaining 5 to 10 percent of the bill goes to state and local taxes.

To further help customers control costs, NICOR last May started an energy efficiency program which offers rebates to people who buy natural gas heating equipment. On a $2,000 furnace, for example, the rebate could amount to $400.

"You'll get savings over  a period of time as well, since the newer models are much more energy efficient," Martinez said.

NICOR also embarked on a "Think Energy" education program this year, handing out energy kits to fifth graders at 52 schools in its service area (the northern one-third of Illinois, excluding the city of Chicago). The kits included aerators, which mix air into faucet water to reduce water consumption, shower timers and an energy-saving shower head.

As far as electricity, Zatkowski of ComEd said that its rates for electricity are set by the Illinois Power Agency, which does energy procurement every April. Similar to NICOR, approximately two-thirds of customers' bills are the actual energy cost, which ComEd passes along without marking up, she said, and about one-third reflect delivery costs, on which ComEd earns revenue.

"Rates were up in 2010, but for 2011, we don't know," she said. "There's always a chance they could go up or down. In 2008, they went down."