Natural Gas Affecting Electricity Prices
November 3, 2022
Your cooperative is feeling the pinch from record-high natural gas prices. Natural gas prices are currently at a 14-year high, up 525 percent since June 2020. Besides other factors, inflation is also impacting natural gas prices.
WHERE YOUR POWER COMES FROM
Most electricity – more than 60 percent in Georgia and 38 percent nationwide – is now generated by natural gas. Not that long ago, natural gas provided less than 10 percent of our state’s power.
Why the change? Environmental concerns have caused a shift away from coal for power generation. Now, only five percent of our state’s electricity is generated by coal. Walton EMC has contracts for most of the power we purchase on the wholesale market. Our power supplier buys the rest on a day-to-day basis. This method makes sense so that we don’t overbuy on days with low electricity demand. Some contract and most day-to-day power is generated with natural gas. That’s because gas-fired plants can be brought in and out of service quickly.
WHY IS GAS GOING UP?
The U.S. Energy Information Agency lists several factors that affect natural gas prices: weather; supply and demand; imports and exports; storage levels; and production levels.
What Walton EMC pays for wholesale electricity has risen dramatically in the past few months because:
• Pipeline capacity, supply and demand – With no new pipelines being built in the U.S. for quite some time, the current capacity to transport natural gas is inadequate. With recent demands for more liquefied natural gas, more natural gas for power generation, and traditional uses like home heating, pipeline companies are charging a premium to move the commodity.
• Weather, supply and demand – Much of the U.S. experienced a heat wave this past summer, causing an increased demand for natural gas-produced power.
• Exports, supply and demand – The U.S. has greatly increased its exports of natural gas to Europe to counter the Russian shortfall, decreasing supplies here at home. U.S. exports have risen more than 1000 times the amount as compared to 2015.
• Storage levels, supply and demand – Since summer natural gas demand was higher and exports have risen, very little natural gas was put into storage for this fall and the coming winter.
WHAT THIS MEANS FOR YOU
Consumers can expect electricity bills to rise modestly over the next few months.
The largest part of your power bill is the wholesale electricity we’ve been discussing here. Walton EMC does a great job at controlling all the other parts of your bill, having some of the lowest overhead expenses in the nation.
“One benefit of being not-for-profit is that we only charge customer-owners the actual cost of doing business,” said Walton EMC’s Greg Brooks. “They can rest assured that we do all we can to keep what they pay as low as possible. Any excess is returned to them in capital credit refunds on their December bill.”
Customer-owners can always find ways to save on energy bills through our Home Energy Evaluation at waltonemc.com. This free service provides a step-by-step video and comprehensive checklist to improve the energy efficiency of any home.
Other services, like levelized billing and payment arrangements, can help consumers who are having a difficult time paying their bill. We also offer referrals to community assistance agencies if that’s needed.
Whatever the case, talk to us. “Our customer service representatives want to help,” said Brooks. “Call us if you need us.”