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Natural gas prices contributing to high utility bills

By Wes Tomlinson

An increase in natural gas costs, caused in part by fallout from Russia’s invasion of Ukraine, and unusually hot weather are driving up power bills in the Tennessee Valley.

High bills are likely to continue through the summer, industry officials say, hitting pocketbooks at a time when inflation is at a 41-year high.

Scott Fiedler, Tennessee Valley Authority spokesperson, said once the price of natural gas decreases, so will consumers’ utility bills. TVA uses natural gas to supplement its other methods of power generation, especially during times of peak demand.

“Folks need to understand the cost of fuel used to generate electricity (has increased),” Fiedler said. “As quickly as that has come up due to economic factors, it will come down just as quickly when fuel costs lower.”

TVA passes that increased cost on to most north Alabama utilities, which in turn pass it on to their customers.

Fiedler said the current cost of natural gas is at a 14-year high. Natural gas is trading at around $7.70 per 1 million British thermal units, more than doubling from $3.84 per 1 million BTUs in July 2021, according to the U.S. Energy Information Administration.

The price of natural gas has been compounded with hot weather this summer, which Fiedler says is the primary contributor to high utility bills.

“The biggest driver for your power bill is usage, so … in some ways hot weather does affect the bill more than fuel,” Fiedler said. “The more you run your AC, the higher your bill is going to be. About 30% (of the increase) is fuel and about 60% is just basic usage.”

Lawrence and Morgan County residents who use Joe Wheeler EMC’s services have used 44,035,148 kilowatt-hours in June, up from 38,083,347 in June 2021. Joe Wheeler’s fuel costs from TVA have also risen from $713,535.81 in June 2021 to $1,290,624.03 last month.

Joe Wheeler spokesperson Michael Cornelison said the increase in kilowatt usage is largely attributable to higher temperatures this summer than last summer.

Hartselle Utilities general manager Bob Sittason said their customers have seen higher bills this summer as a result of rising temperatures and an increase in fuel costs.

The Tennessee Valley Authority (TVA) has announced that due to rising fuel costs over the past several months, the monthly fuel cost adjustment for local power companies (LPC) has increased. Fuel costs are the price TVA pays for coal, natural gas and other sources to generate electricity. In order for TVA to recover these costs, these increases are passed on to all TVA customers and are part of the rate Hartselle Utilities charges for electricity. HU’s average residential bill for July 2022 based on 1,000 kilowatt hours (kWh) is $137.22. This same 1,000 kWh in July 2021 was $116.69. This increase is due to the doubling of TVA’s fuel cost adjustment charge for July 2022 compared to July 2021.

In addition, as a result of the extremely hot weather, Hartselle Utilities also saw an increase in our average customer’s usage in the months of June and thus far in July. Overall, HU sold 5,472,930 kWh in June 2022, up 14.6 % from June 2021. Residential sales from June 2022 compared to June 2021 were up an average of 23.4%.

Fiedler said TVA has not increased its base rate for electricity but fuel cost adjustments have been higher, which results in higher utility bills.

“TVA does this on a monthly basis versus other utilities who may have cost adjustments on a yearly basis,” Fiedler said. “We do that to help protect consumers because costs for fuel are variable and, if (the price) goes up, we want it to come down just as fast.”

A recent report by the International Energy Agency attributes much of the global increase in natural gas prices to Russia’s invasion of Ukraine and to the resulting European sanctions.

The invasion, the agency said, “triggered a major energy supply crisis, with broad repercussions for the global economy and energy outlook. … The European Union’s commitment to speed up the phase-out of Russian imports — historically its largest supplier — is transforming Europe’s gas market, with repercussions for global gas dynamics.”

The pressure on natural gas prices has been exacerbated by increased U.S. exports of the commodity to Europe and a large explosion at a major liquefied natural gas facility in Texas last month that will render it inoperable until at least October.

Fiedler said TVA’s average residential customers should expect an extra $18 on their utility bill in July, which he expects to be less affected by the increase in natural gas prices.

“The beauty of TVA and why we’re in a better position than other utilities is because 57% of our electricity is carbon-free already,” Fiedler said. “Over half of our electricity is not fossil fuel based and not dependent on fossil fuel or even global events changing, dramatically increasing the price of it.”

Much of TVA’s electricity is from nuclear and hydroelectric power.

Hartselle resident Shanna Eisner said she and her husband’s utility bill was actually less in June than it was in May, but she is prepared to pay higher bills as the summer rolls on.

“It was a little lower for some reason, last month it was around $300,” Eisner said. “It was like $287 this time. I don’t know what caused the difference but I think the next one is going to be high again.”

Eisner said her household has been using more electricity this summer to battle the heat.

“It (the air conditioning) stays on a lot more,” Eisner said. “I’ve even risen it higher than I normally would. Normally, we keep the house around 70 to 71 (degrees) and it’s hovering around 73 to 74 during the day just because it’s so hot.”

Eisner said she has been doing things like leaving ceiling fans on and wearing cooler clothing around her house to limit air-conditioning use.

“They tell us to reduce using our stoves but it’s so expensive now to go out and eat, we’re kind of stuck,” Eisner said.

 

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