Energy Supplies Are Good, But a Colder Winter Will Mean Higher Bills

November 28, 2016

Michigan Agency for Energy releases Winter Energy Appraisal

LANSING, Mich. – Customers will continue to benefit from low natural gas and propane prices but increased usage compared to last winter could mean higher bills overall, according to the Michigan Agency for Energy’s (MAE) Winter Energy Appraisal.

“Last winter was a warm one, and we had near record-low energy prices, so Michiganders enjoyed a year of relatively low heating costs,” said Valerie Brader, MAE’s executive director.  “This winter we should have plenty of supply and low costs, but a more normal winter will probably mean higher bills than last year because we will be using more energy to heat our homes and businesses.”

Regional and national inventories remain strong for winter fuels, and barring any unforeseen geopolitical, infrastructure, or weather-related event, current supply should be adequate to meet expected demand and help keep prices in check.

Natural Gas – Expectations are for continued relative stability of natural gas prices and supply. However, residential consumers should expect to see their winter expenses rise about 25 percent over the 2016-2017 winter season due to anticipated increases in natural gas consumption.  Michiganders can compare natural gas costs from different providers at the CompareMIGas website.

Propane – Both U.S. and Midwest propane inventories remain strong.  Prices are a bit higher than we saw last year -- for the week of November 14, the average residential propane price in Michigan was $1.70/gallon, about 15 cents higher than this time last year. 

Petroleum – The majority of petroleum products consumed in the state are motor fuels, such as gasoline and diesel fuel.  Crude oil stocks in the Midwest are slightly higher than last year.  Assuming normal weather and absent unexpected supply problems, it is expected that the price and supply of petroleum products will be stable for the remainder of 2016.  Right now, motor gasoline is slightly less expensive than at this time last year, and usage is expected to grow regionally due to lower prices, growing employment, and rising wages.  Diesel fuel and heating oil are both lower cost than at this time last year. 

Electricity – No supply shortages or transmission constraints are expected to affect the ability of Michigan utilities to meet winter peak electric demand. During this past summer, in order to meet electric demand, more than 98 percent of all available resources in the region had to be used. In the vast majority of cases, electric rates do not vary seasonally. 

In August, MAE announced $89.5 million in energy assistance grants to 14 organizations to provide low-income customers with assistance. MAE’s consumer tips sheet on home heating help outlines the various programs available to low-income customers and others.

In Michigan, 77 percent of households heat with natural gas, 8 percent use propane, 9 percent use electricity, 3 percent use wood, 1 percent use heating oil, and 2 percent use another heating fuel.

MAE’s Winter Energy Appraisal, published since 1978, reviews the projected prices and availability of energy in Michigan over the winter months.

For more information about MAE, please visit www.michigan.gov/energy or sign up for its listservs to keep up on MAE matters.