Home heating costs forecast for 2014-2015 winter

Winter is back with rising heating bills for US households after a block of cold air nearly the size of the entire Lower 48 descended from the Arctic.

November 2014 is now on track to be the coldest November since 1996.

This winter was expected to bring much lower bills than last year because it wasn’t supposed to be so cold. Homeowners could go a little easier on the thermostat, and less fuel use would offset rising prices for natural gas and electricity, which generates heat for 88% of US households.

Most forecasters think January and February will also be colder than normal across most of the US.

The Energy Department forecast in October that customers of all fuels should expect to see lower heating bills between October 1 and March 31. But the agency said if the winter came in 10% colder than forecast, natural gas customers would pay 6% more than last year and electric customers would pay 2% more.

The change in forecast can be seen in a suddenly volatile natural gas market. In late October and early November the futures price of natural gas rose 24% over 9 days. Then it dropped 10% in 4 days before climbing again.

On November 18 it closed at $4.24 per 1,000 cubic feet, down for the day but 17% higher than in 2013.

Natural gas futures prices don’t translate immediately into higher residential prices because of the way utilities buy and sell the fuel, but higher prices find their way to customer bills eventually. The Energy Department predicts residential natural gas prices for November through February will rise 7% compared to the same period last year, according to its most recent forecast.

Natural gas prices also determine the price of electricity in much of the US, and are helping to push power prices higher. Customers of several New England utilities have been warned of jumps of 20% or more this winter. Nationwide, power prices are expected to be up 3% compared with last year, the biggest annual rise since 2008.

Customers who burn heating oil and propane will likely pay less than last season because the fuel will cost less – but now they may have to fill their tanks more often than they had hoped.