Higher fuel costs likely to drive up Nebraska heating bills again this winter

Steps now can reduce sticker shock from January-March costs

By: - December 19, 2022 5:45 am

Experts advise Nebraskans to lower their thermostats to 68 degrees to save money this winter amid anticipated higher costs for heating. (Aaron Sanderford/Nebraska Examiner)

LINCOLN — Local utilities, social service agencies and fuel companies have spent months urging Nebraskans to take some simple steps to slice the edge off winter heating bills.

Experts project that this winter’s bills could outpace last year’s tallies by 15% to 50%, as shifting demand, global instability and inflation increase the costs of natural gas, propane and electricity. 

The time to conserve energy is now if customers want to avoid an early financial hit from an arctic blast that arrives this week in the Midwest, bringing highs in the single digits and earlier-than-typical, sustained lows below zero, local utility and fuel companies told the Nebraska Examiner.

The most important step to save money is setting the thermostat a little lower than typical. Most utility officials suggested 68 degrees — warm enough to keep water pipes from bursting but cool enough to save some cash. Another big help: turning down the thermostats on water heaters.

“The most efficient is the energy you don’t use,” Black Hills Energy spokeswoman Brandy Johnson said. “Turning down your thermostat, making sure doors and windows are tight, changing that furnace filter.”

Those who act as if nothing has changed might regret it when heating bills arrive in January, February and March.

Natural gas prices up

Nebraska’s natural gas customers are facing a second straight pricey winter for gas, driven primarily by more people and places competing for tightened supplies. 

Dave Bellairs, director of energy acquisition for Omaha’s Metropolitan Utilities District, said natural gas supplies are still recovering from the 2021 winter storm that shut off gas wells in Texas and Oklahoma.

Another factor driving up prices is the global push for cleaner-burning electricity production, he said. More utilities are using natural gas instead of coal or oil to produce power, including many in Nebraska. 

Increased natural gas use for electricity has increased the off-peak prices that utilities and gas companies pay to buy gas in the summer, to store for winter use when the gas typically costs more.

“Going into winter, some utilities have changed their buying practices, and the market hasn’t yet adjusted to the new reality,” Bellairs said. 

This year’s hotter-than-typical summer drove up peak demand for air conditioning and electricity. Power plants burning natural gas bought more fuel, which tightened supplies, said Luke Hansen, manager of gas supplies for NorthWestern Energy, which serves North Platte, Grand Island and Kearney.  

That, combined with a colder-than-usual spring, made it harder for utilities and gas companies to store more gas for this winter, he said. So more providers are bidding for available gas.

War in Europe

Adding to the higher costs is the Russian attack on Ukraine, which has American natural gas suppliers exporting more fuel to European nations that previously bought a lot of their winter stock from Russia.  

“The combination of all of those increases in demand … coupled with production that was relatively flat year-over-year, has really led to the increase in natural gas prices,” Hansen said. 

Natural gas customers should expect to pay at least 15% more. Some could see the gas portion of their bills climb two to three times higher than they paid as recently as 2019, officials said. 

Of course, those were historically low prices for natural gas that might not return given the new level of demand, energy experts explained. 

None of the natural gas buyers the Examiner spoke with could say when prices might level out or decline. Typically, each said, it takes more than a single winter, and often longer than a year.

Propane still pricey 

Nebraska’s rural and exurban customers who heat their homes with propane face higher costs, as well, but perhaps less volatility this winter than last, dealers said.

Randy Birchem of Frontier Cooperative in Lincoln expects costs to hold steady this winter after spiking last year. His group delivers propane to a broad swath of the state, from Nebraska City in the southeast corner to Fullerton in central Nebraska. 

Regional supplies, he said, feel solid for the winter, if it doesn’t get too cold for too long. Prices have come down a bit from this fall. But propane dealers are feeling a pinch from the increased exports to Europe. 

Help available

Utility leaders urged anybody worried about higher prices to contact their provider and join a budget billing program. These programs spread costs over a longer period of time — often a year.

Black Hills Energy, for example, offers its eastern Nebraska customers who aren’t eligible for the Choice Gas program an annual price option. In November, 13,557 customers were in the program. The utility serves communities including Lincoln, Norfolk, Papillion and Beatrice.

People who need help with their bills have options, as well, from applying to charities run by and for utilities and their private foundations to the federally funded and state-administered Low Income Energy Assistance Program, or LIHEAP. The program is open to people earning up to 150% of the state’s poverty level.

Applications this year are already ahead of 2021’s record tally, according to public records provided by the Nebraska Department of Health and Human Services.

The state had more than 74,000 applications for the assistance so far this year, compared with 70,499 applications in 2021 and 66,538 in 2020, during the worst of the COVID-19 pandemic. 

The state typically spends about $32 million in federal funds on the program. The federal funds were increased by $10 million this year, in anticipation of higher costs and need. The average annual amount of aid per household since 2019 was between $720 and $900.

Utilities and local charities say applicants are seeking larger amounts of aid as prices rise. They pointed to the wind-down of coronavirus-related utility aid that was part of rental assistance programs.

The utilities urged customers to do their part now to control costs. 

Johnson, of Black Hills, said, “The most important thing for our customers to know is they need to take their own steps to manage their bills by actively managing their energy usage.”

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Aaron Sanderford
Aaron Sanderford

Political reporter Aaron Sanderford has tackled various news roles in his 20-plus year career. He has reported on politics, crime, courts, government and business for the Omaha World-Herald and Lincoln Journal-Star. He also spent several years as an assignment editor and worked two stints as an editorial writer. From 2005 to 2007, he served as communications director for then-Nebraska Gov. Dave Heineman. Aaron most recently was the lead investigative reporter for KMTV 3 in Omaha, focusing on holding public officials accountable. His work has received awards from the Associated Press, Great Plains Journalism and more.