Reduced winter heating bills expected

Predictions that Americans will spend less to keep their homes warm this winter is welcome news amid the doom and gloom of the worst economic downturn in decades.

"Anytime we can get a little savings, it's great," said Wayne Utley, of Leighton, as he paid his Sheffield Utilities bill.

The U.S. Department of Energy's Energy Information Administration reports prices for electricity, natural gas and propane are expected to be less this winter than in 2008.

"We expect household bills for space-heating fuels will be 8 percent lower than a year ago, with the average household spending $960 in the October through March winter heating season, a decrease of $84 from last winter," Richard Newell, administrator of the Energy Information Administration, said in a prepared statement.

Jon Cogan, a spokesman for the Washington, D.C.-based agency, said the biggest savings are expected for customers who heat their homes with natural gas or propane.

"Natural gas prices in the South are expected to be about 12 percent less this winter than they were last year," Cogan said. "Propane prices in the South are also expected to be down about 12 percent."

Cogan said the savings on natural gas will vary greatly among utility districts.

North Alabama Gas District customers are paying about 34 percent less now than they did this time in 2008. The utility serves portions of Colbert and Lawrence counties.

Mike Doyle, manager of the Florence water, wastewater and gas departments, said Florence Utilities customers are paying 28 percent less for natural gas now than they did in October 2008. "We have the lowest residential rate of any utility in north Alabama."

Sheffield Utilities customers are paying 29 percent less for natural gas than they did at the start of the 2008 heating season. Sheffield Utilities General Manager Allen Hughes said the natural gas bill for his home in October 2008 was $31.50. This year, his October bill was $24 for the same amount of natural gas.

Tuscumbia Utilities customers are paying 26 percent less for natural gas than they did in October 2008.

David Thornton, general manager for Tuscumbia Utilities, hopes the lower prices for natural gas will continue through the winter. He said wholesale prices for the fuel have risen in recent weeks as the heating season has begun and demand for the fuel has increased.

Lisa Kendrick, of Tuscumbia, hopes the lower prices for natural gas are not a short-term glitch in the market. Her family heats their home with natural gas. They have relied heavily on a wood-burning fireplace to supplement the heating system in recent years when natural gas was fetching record prices.

"With the price of natural gas down a little, it's going to help us a lot this winter," Kendrick said.

Susan Delenne, spokeswoman for Birmingham-based Alagasco, which distributes natural gas in eastern Lauderdale County, said the company has dropped its prices three times since last winter and is considering another rollback later this year. Since June 2008, Alagasco has reduced the price of natural gas for residential customers by about 7 percent.

Cogan said electricity prices are expected to be about 3 percent lower in the South this winter.

Customers of utilities that purchase electricity from the Tennessee Valley Authority will save even more. Since October 2008, the average monthly utility bill for residential customers in the TVA region has fallen about $13 since October 2008. Another 1.5 percent reduction in TVA's fuel surcharge will take effect Nov. 1.

Cogan said the lower prices for utilities are good for residential users but bad news for the health of the nation's economy. He said the falling prices are a result of decreasing demand for energy by industries and other major consumers of electricity, natural gas or propane. As industrial and commercial customers have closed or scaled back their business, the demand for energy has plummeted. When the economy improves and the demand for energy rises, prices will rise, Cogan said.

Richard Morrissey, manager of the Florence Electricity Department, said while electrical rates rise and fall depending on the price of fuel used to generate the power and the cost of operating the utility systems, the swings tend to be less dramatic than natural gas and propane.

Natural gas and propane prices spiked after hurricanes Katrina and Rita damaged natural gas and oil platforms in the Gulf of Mexico and refineries and pipelines along the Gulf in 2005.

After the sharp rise in gas prices, Morrissey said many residents who had heated their homes with natural gas or propane began switching to electricity as their furnaces need replacing or when new homes were built.

"Everybody knows the price is electricity is going to go up in the coming years," Morrissey said, "but I believe they have more confidence the increases are going to be more gradual than the price for natural gas or propane."

Greg Hamm, owner of J.C. Hamm and Sons in Florence, said most of the heating units his company installs are electric.

"Nine out 10 units we install are electric heat pumps," he said. "Five years ago, it would have been just the opposite with most of the units being natural gas."

Local natural gas distributors said they have not noticed any mass exodus of customers since fuel prices soared in 2005. They also have not noticed a rush to connect to natural gas systems since prices began to fall.

With natural gas prices falling, Doyle expects to see more Lauderdale County residents heating their homes with the fuel. He admits the lower prices might not last.

"It's like gasoline," Doyle said. "A hurricane, a terrorist action, an unusually cold winter and anything else that disrupts the fuel supply or causes consumption to rise can cause natural gas prices to rise."

The price of propane typically mirrors increases and declines in the price of natural gas.

Newell uses a heat pump to heat his home, but has a natural gas heater that he can use during power outages.

"With natural gas coming down the way it is, I might use that heater more this year," he said.

Cogan said residents who have access to more than one source of energy for heating their homes can use the one that is most affordable at the time.

He said consumers should think long and hard when installing a home heating system.

"Home heating systems have a long life expectancy," Cogan said. "Before installing one, you need to do a lot of calculations and study predictions for fuel prices in the future before deciding which is the best for your home. It can be a difficult decision to make."

Regardless of the method chosen for heating a home, local utility officials stress the importance of conserving energy.

"We're all going to have to become more energy conscious as time goes on," Morrissey said.

"We have been fortunate to have had low energy prices in our region for many years. Energy prices have risen in recent years and are going to continue to rise.

"The more we do to conserve energy, the less those price increases are going to impact our lives."

Dennis Sherer can be reached at 740-5746 or dennis.sherer@TimesDaily.com.