CHICOPEE, Mass. (WWLP/Mass.gov) – You are likely cranking the heat right now and that won’t be good for your heating bill.
Between frigid temperatures, higher demand, and energy price hike, yesterday’s price is not today’s price when it comes to your heat and energy bills. Some people may see an increase of 30 percent or more, it depends on what kind of fuel you use.
Heating your home is typically going to be your largest energy expense but there are ways you can lower your bill.
- Install programmable thermostats, and set them to lower the heat at night or when you’re away.
- Installing LED lightbulbs, they use about 75 percent less energy and last about 25 times longer than incandescent bulbs.
- Reset your hot water heater, it’s often a big use of heat and if you set it to 120 degrees it will give you around 10 percent in energy bill savings.
- If you go on a vacation, turn it down even more.
On a regular day you can save around one to three percent on your bill for each degree you lower your thermostat in your home.
Space heating is the largest part of household energy costs. As a leading state in energy efficiency, DOER helps run programs to reduce home heating energy use, lower heating bills, reduce greenhouse gas emissions, and provide consumers with information on their home heating choices. Every year, DOER analyzes the winter weather forecast and the projected prices and consumption for major heating fuel sources (natural gas, heating oil, propane, electric heating) to provide heating season cost projections for Massachusetts homes. To see the breakdown of how Massachusetts households heat their homes visit here.
Forecast of winter conditions and expected energy use
While fuel prices are the biggest factor in what households are expected to spend on heating, winter weather has a significant impact on heating bills. A colder winter causes an average home to use more fuel and spend more while a milder winter may mean households use and spend less.. The National Oceanic and Atmospheric Administration’s (NOAA) Winter Outlook for 2021-2022is forecasting warmer than normal winter temperatures compared to last year, however these temperatures will still be colder than last year by about 5%. Massachusetts is expected to follow this trend, projecting to be also about 5% colder than last year.
According to the U.S. EIA Winter Fuels Outlook, COVID-19 continues to affect both energy prices and supply levels. Average residential energy use (such as powering electric appliances and space cooling and heating) has increased. As the global economy has come back online following the 2020 shutdowns, transportation energy use has also increased. The increased global demand is pushing energy prices higher. EIA forecasts that there will continue to be more residential energy use in the U.S. this winter compared with previous winters. More people are continuing to work from home this year, which EIA expects will increase demand for space heating like last winter. This is true in Massachusetts as well as many businesses continue to have staff telecommuting.
Heating fuels price forecasts for this winter
The U.S. Energy Information Agency released its Winter Outlook for 2021-22 in October. EIA is predicting higher prices for all heating fuels this heating season. In the Northeast, EIA predicts a 14% increase in natural gas prices, a 7.3% increase in electricity prices and a 42% increase in propane prices. Nationally, heating oil prices are expected to increase by 33%. The large increase in propane and heating oil prices are driven by a combination of increased global demand leading to increased crude oil prices and an expectation of a colder winter than last year. For more information on the factors impacting each fuel, click here.
As shown in Figure 1, heating fuels costs vary from year to year due to many factors including market conditions, weather, and changes in demand.
Figure 1: Trends in Heating Fuel Costs
Note: prices used for these graphs were pulled from U.S. EIA (heating oil and propane) and the utilitiy filings at Mass. Dept. of Public Utilites (natural gas and electric rates)
Projected household heating costs for 2021-2022 by average consumption for each fuel
All residential customers should expect an increase in winter heating costs over last winter
Homes in Massachusetts use different types of fuel for heating and the average type of home for each fuel type is different. For example, electric resistance heat, or electric baseboard heat, is more often used in apartments in multifamily housing. These spaces tend to be smaller than single family homes which are more likely to use oil or gas. Larger spaces use more fuel (consumption) to stay warm and therefore can have higher costs. Based on the EIA’s Outlook and utility company (electric and natural gas) filings at the Mass. Department of Public Utilitiesand the average household size for each fuel type, Table 1 shows DOER’s estimates of heating costs for this winter for a residential customer for each fuel type:
Table 1: 2021/22 Estimated Heating Costs Based on Average Consumption for each Fuel
|Heating Fuel||Forecasted Fuel Price ($)||Forecasted Fuel Price ($/MMBTU)||Average Consumption||Estimated Expenditures||Change from Last Year||Approximate Heated Square Footage per Household|
|Heating Oil||$3.27/gallon||$30.23||717 gallons||$2,343||+47.3%||1,903|
|Natural Gas||$1.87/therm||$23.26||664 therms||$1,243||+22%||1,814|
|Electric Resistance Heat||$0.26/kWh||$75.50||3644 kWh||$939||+14.7%||1,272|
Note: Electric Resistance Heat bills reflect ONLY heating costs. There are additional costs for lighting and appliances included in an electric bill. There may also be additional utility costs for water/cooking if heated by a different fuel than what your space heating fuel is.
The five-year trend in heating costs based on the average consumption for each fuel type is shown below in Figure 2.
Figure 2: Estimated Household Heating Costs 2017/18-2021/22
Note: To see the full break out of the calculations used in this graphic-see Table 2: Detailed Calculations of Changes in Heating Costs in factors impacting heating prices section.
Help with your heating bills
Massachusetts offers a wide variety of financial incentives for all consumers to save on their energy bills, including no-cost programs for home upgrades and enhanced incentives forincome eligible customers. The statewide Mass Save® program offers no-cost home energy assessments, rebateson efficient heating equipment as well as 0% financing for major energy efficiency measures.
As part of the Columbia Gas settlement, funds will provide debt relief for gas bills to thousands of low-income gas customers and enable clean energy and energy efficiency efforts in homes and buildings in Lawrence, Andover, and North Andover. Visit the Merrimack Valley Clean Energy & Energy Efficiency Programs page for more information.
Customers of municipal light plant companies (MLPs) can also access similar benefits through the HELPS energy efficiency programs. Contact your municipal utility for more information on available programs.
If you are a residential customer struggling to pay your utility bills, contact your utility to discuss available payment plans. For more information please see: Frequently Asked Questions about Electric, Gas, and Water Utilities during COVID-19. Consumers can also take advantage of the Home Energy Assistance Programs, including fuel assistance and energy efficiency programs for income eligible households.
For additional information on saving energy, visit the U.S. DOE’s Energy Saver’s website. Get tips on weatherizing your home, maintaining your heating system and more. Consumers can also download the free Energy Savers Guide (available in English and Spanish, Espanol).
Comparing heating technologies to save on your heating bills
Clean heating and cooling technologies have advanced in the Commonwealth with air source heat pumps leading the way. Air-source heat pumps are a more efficient and cost effective way to heat your home using electricity at a fraction of the cost of oil or propane. These hyper-efficient and quiet heat pumps operate in below zero temperatures to heat living and working spaces comfortably and efficiently. During the summer months, these units are used to efficiently cool spaces. Visit the Massachusetts Clean Energy Center’s Air Source Heat Pump Guide for more information.
Ductless, mini-split system heat pumps (mini splits) are a good option for homes with non-ducted heating systems, such as hot water heat, radiant panels and space heaters (wood, kerosene, propane). Mini-splits are also a good choice for room additions where extending or installing distribution ductwork is not feasible and very efficient new homes that require only a small space conditioning system.
For more information on mini-splits, central heating and ground source heat pump systems as well as available rebates and incentives, visit Mass Save’s Heat Pump Heating and Cooling website. If you are a municipal utility customer, visit their website or contact them for more information on available programs. Some municipal utilities have information on their programs at Home Energy Loss Prevention Services (HELPs).
DOER’s Alternative Portfolio Standard (APS) allows consumers to receive compensation for heat generated by renewable heating and cooling technologies such as heat pumps, solar hot water, woody biomass, liquid biofuels, and biogas. Eligible facilities receive certificates for the heat they produce, which can then be sold to retail electricity suppliers that are required to purchase a certain amount of certificates each year.
Factors impacting heating prices
Natural Gas: Based on utilities natural gas filings at the Department of Public Utilities (DPU), DOER estimates that natural gas price for this winter will increase to an average of $18.60/MMBtu ($1.86/therm) compared to $16.17/MMBtu ($1.62/therm) last winter, an increase of about 16%. Consumption of natural gas is expected to increase about 5.4% % due to forecasted colder winter temperatures than last year. The EIA forecasts that residential natural gas prices will increase in all regions of the U.S. this winter. The Northeast region will see a relatively smaller residential price increase of 14%. Much of the increase in prices is due to higher demand as the global economy continues to reopen from the pandemic. Supplies are behind demand currently and will continue to catch up into the beginning of 2022. Wholesale natural gas prices are also rebounding from the record low prices in 2020 due to COVID-19 impacts.
Heating Oil: Prices for heating oil are expected to average 33% more than last year, raising overall bill costs (expenditures) by about 43% nationally. In Massachusetts, DOER forecasts a 47% increase in expenditures. The EIA forecasts the Brent crude oil price, which is the most relevant crude oil price in determining U.S. petroleum product prices, will average $80/barrel (b), or $1.90/gal this winter, which would be 65 cents/gal (52%) higher than last winter. The higher forecast Brent crude oil price this winter primarily reflects a decline in global oil inventories compared with last winter due to global oil demand that has risen amid restrained production levels from OPEC+ countries due to COVID-19 impacts and economic shut-downs.
Additionally, the EIA reports low distillate oil (which includes heating oil) inventories in the Northeast. Inventories from this year began above the five-year average but declined over the first five months of the year, when refineries operated at reduced rates because of a decline in petroleum consumption related to the COVID-19 pandemic and weather-related outages. Since then, distillate inventories in the Northeast have remained below the previous five-year average. On May 7, 2021 (when Northeast distillate inventories were already 18% below the five-year average), Colonial Pipeline paused operations because of a cyberattack. Distillate inventories in the Northeast hit a 2021 low of 24.7 million barrels the week of May 21. After operations on Colonial Pipeline were restored, distillate inventories in the Northeast increased, but they have remained below the five-year average.
Propane: According to the EIA, propane prices in the Northeast are expected to rise about 42% this winter. This increase coupled with increased consumption of around 4% will result in an increase of about 47% for propane bills. Propane markets are experiencing low inventory levels and high prices heading into the winter heating season. As of October 1, 2021, wholesale propane spot prices at the Mont Belvieu hub, near Houston, were up $1.00/gal (204%) from the same time in 2020. Propane spot prices have recently been at their highest levels since February 2014 due to increased global demand for propane, relatively flat U.S. propane production, and less global propane production because of limited oil supplies from OPEC+ countries. Wholesale propane spot prices at the Mont Belvieu hub were 12% higher than at the same time in 2019.
Electricity: Based on filings by the Electric Distribution Companies with the DPU, basic service, also known as energy supply prices, for Massachusetts utilities will increase this winter. DOER estimates the total retail residential rates (supply plus distribution rates) will increase about 8.8% from 23.67 cents/kWh last winter to 25.76 cents/kWh this winter. With winter temperatures expected to be colder than last year, consumption is estimated to increase by 5.4%. The increase in consumption coupled with the increase in electricity costs will raise bills overall by about 14.7%. Retail electricity prices reflect the cost of providing the electricity, especially the cost of fuel for power generation and wholesale electricity prices. Natural gas is the primary fuel used to generate electricity in New England. During the first seven months of this year, the cost of natural gas delivered to U.S. electric generators averaged $4.97/MMBtu, which is more than double the average cost in 2020. Municipal electric heat customers should check with their individual utility for prices.
Renewable thermal technologies, including air-source heat pumps, solar water heating, biofuels, and biomass pellet heating, are technologies that can offer homeowner’s significant energy costs savings. DOER is promoting these technologies, as outlined on DOER’s website under Clean Heating & Cooling.
For consumers interested in following energy markets and prices throughout the heating season, the EIA tracks energy prices and the issues influencing them. This information is published in, “This Week in Petroleum” (TWIP) on DOE’s website, www.eia.doe.gov. To assist in tracking factors impacting all heating fuels, EIA also publishes the “Annual Winter Fuels Outlook”as part of its monthly Short-Term Energy Outlook
Table 2: Detailed Calculations of Changes in Heating Costs