By: Tim Knauss |
After enjoying the lowest electricity prices in more than a decade during 2012, customers are starting 2013 with a jolt.
Wholesale electric prices have shot up more than 60 percent since mid-January. That will add $5 or $10 to a typical household utility bill and more than $1,000 to the monthly bill of some small businesses, experts say. The increases are being felt around the state, regardless of whether customers buy from utilities or energy service companies, said Phil VanHorne, president of BlueRock Energy Inc. in Syracuse.
The culprit is that bitter cold snap during the week of Jan. 21, said David Flanagan, speaking for the New York Independent System Operator, which runs the state power grid. Severely cold temperatures that week sharply increased demand for both natural gas and electricity, prices for which shot upward in lockstep.
For the month of January, wholesale natural gas prices in Downstate New York more than doubled to $9.98 per decatherm, up from $4.77 in December. Although Upstate gas prices did not increase, the Downstate spike caused electric prices across the state to rise because gas is a significant fuel for power generation, VanHorne said.
Wholesale electric supply prices have risen more than 60 percent in a month, from about 4.5 cents per kilowatt-hour in mid-January to 7.4 cents this week.
The good news: The higher prices are not expected to last, VanHorne said. Natural gas is in plentiful supply nationally, and prices generally are near historic lows. That’s why electric prices were low during 2012.
The problem in January was that demand for heat and electricity surged so rapidly in the bitter cold that it exceeded the capacity of gas pipelines feeding Downstate New York. That created a shortage and drove the price up. Power plants paid more for gas, if they could get it, or switched to more expensive fuels like oil, Flanagan said.
After getting a flurry of calls this month, VanHorne sent a letter to customers this week explaining what happened. For some commercial customers such as restaurants, the higher electric price could mean a bill increase of more than $1,000, he said. “We had this period of low prices, so when you see a sudden increase like this people wonder what’s going on,’’ he said.
VanHorne said he expects the price of power to return to normal soon. “It’s subsided to some extent already,’’ he said.