2021 Energy Costs and Sustainability

The U.S. government has warned consumers that they are in for a winter of sky-high heating bills. The Energy Information Administration’s (EIA) winter forecast predicts that most household heating bills will be as much as 54% higher than last winter.

“As we have moved beyond what we expect to be the deepest part of the pandemic-related economic downturn, growth in energy demand has generally outpaced growth in supply,” said EIA Acting Administrator Steve Nalley. “These dynamics are raising energy prices around the world.”

Natural gas prices have risen the most, doubling in the first six months of 2021 and rising 17% in September. According to the EIA, nearly half of U.S. homes use natural gas, but the rest won’t escape higher heating bills. The cost of propane is expected to be 54% higher this winter, and heating oil costs may be 43% more than last winter.

The cost of electric heat is expected to rise only 6%. However, most electric utilities are powered by natural gas and may be affected by higher costs for that fuel.

Colder than normal winter

Making matters worse, the U.S. could be in for a harsh winter. The National Oceanic and Atmospheric Administration (NOAA) expects a slightly colder winter this year when compared to last year. The EIA expects those colder temperatures to increase U.S. energy consumption for heating this winter.

While the U.S. will have to contend with higher prices, China and parts of Europe are dealing with an energy shortage that is affecting prices on world markets. Much of the problem can be traced to the COVID-19 pandemic and changes in consumer behavior.

“The higher global and domestic energy prices that are resulting from economies beginning to grow again are going to translate into larger household bills for energy this winter,” Nalley said.

How to prepare

Consumers should probably prepare now for higher wintertime utility bills. Replacement windows are a big investment, but they could result in more reasonable heating bills. In January, Rod, of Easton, Pa., told us he had just installed new windows from Renewal, by Andersen.

“In short, experience this winter, house feels warmer,” Rod wrote in a ConsumerAffairs review. “No actual data yet based on heating bills but am confident that the data will support the perception.”

A less expensive measure is improving a house’s weatherproofing. Sealing window and door frames with caulk and adding weatherstripping may be the most affordable remedy, but it only goes so far.

It may be time to unpack those gloves and sweaters.

Fall has just begun, but it’s not too early to think about winter and preparing for what are almost certainly to be sharply higher heating bills.

Over the last couple of months, natural gas prices have skyrocketed. According to the Wall Street Journal, natural gas prices have doubled in the last six months. Prices are up 17% so far this month.

Demand for gas is up, and supplies are down around the world. Demand is likely to increase even more when cold weather arrives and gas furnaces are back in operation. 

Consumers who heat their homes with gas may see their monthly bill move sharply higher, but the American Gas Association, an industry trade group, says gas is still cheaper than other heating fuels. It cites Department of Energy data showing the average costs of five residential energy resources for 2021, finding natural gas to be approximately one-third the cost of electricity.

Electricity costs also likely to rise

In fact, those heating their homes with electricity will also feel the effects of more expensive natural gas this winter. Most electricity generation plants are powered by gas. Industry analysts say the blisteringly hot summer increased natural gas demand to keep homes and businesses air-conditioned.

Currently, utilities pay $5 per 1 million British thermal units, or mmBtus. For consumers heating their homes with gas, that roughly translates into twice the cost of last winter’s heating bills. There’s no guarantee prices won’t go even higher.

“You could easily see it reach $6 and you could see it get to $8 to $10,” John Kilduff, partner with Again Capital, told CNBC earlier this month. “Any early-season cold weather outbreak will juice this thing.”

How to prepare

Consumers can prepare now for higher wintertime utility bills. A first line of defense is improving a house’s weatherproofing. Sealing window and door frames with caulk and adding weatherstripping may be the most affordable remedy, but it only goes so far.

A lot of energy is lost through glass, so replacing older, single-pane windows with new, double-pane windows will reduce the flow of expensive heat to the great outdoors. Replacement windows are expensive, but the cost could easily be offset by keeping utility bills in check.

Todd, of Valrico, Florida, tells us he replaced all of his home’s windows with NewSouth replacement windows and noticed the difference.

“I have cut my utility bill by 25% to 30%,” Todd wrote in a ConsumerAffairs review. “My biggest savings happen during the warmest months of the year! That's big in Florida!”

ConsumerAffairs has collected thousands of verified reviews of window replacement companies.

The average home price has risen sharply during the pandemic and is now at an all-time high. But a new report from real estate marketplace Zillow makes clear that not all home buyers are paying those soaring prices.

The Zillow survey focused on people who moved out of their area during 2020. It found, on average, that these consumers sold a home in an expensive area and purchased a home for less money -- or gained more space in a larger house -- when they moved to a more affordable market.

There was a significant increase in the number of people who were able to do that since nearly all employers closed offices and allowed employees to work remotely. The report found that people moving from one market to another gained an average of about 33 square feet of living space. That’s about the size of a bathroom or walk-in closet.

"The ability to sell in a relatively expensive market and relocate somewhere more affordable -- either to save money or get more bang for their buck with a larger property -- was extremely attractive to movers," said Jeff Tucker, senior economist at Zillow. 

The great reshuffling

Realtors call it the “great reshuffling.” Large cities like New York, Chicago, and Los Angeles saw more people moving out last year. Sunny and more affordable markets like Phoenix, Charlotte, and Austin saw more people moving in. 

As far as the real estate market goes, Tucker says the trend could contribute to a convergence in home prices that will cause prices to rise in their new home destinations.

What it will mean for the job market has not yet been determined. As employers begin to require employees to return to the office, someone now living in Austin probably won’t go back to a job in Chicago.

Job openings are surging

It may not be a coincidence that the number of posted job listings hit a record high of 9.3 million in April, according to the Labor Department’s Job Openings and Labor Turnover Survey (JOLTS). 

Analysts said the surge in job postings is the result of an economic upturn set in motion by the nation’s recovery from the pandemic recession of last year. April’s job postings beat a record set in March of 8.3 million and topped analysts’ expectations of around 8.18 million. 

Companies may already be dealing with employees who have decided not to return to the office. And that trend may be just beginning. When Apple announced plans to require its workers to return to the office three days a week starting in September, it resulted in a complaint letter from employees. 

So the “great reshuffling” in real estate could lead to a similar reshuffling in employment. The San Francisco Chronicle reports that companies’ return to work edicts could lead to a job exodus as people seek other jobs that can continue to be performed remotely.

Texas officials say the massive electric bills consumers were hit with in the wake of unprecedented frigid temperatures will be forgiven. 

On Tuesday, Texas Attorney General Ken Paxton said residents in the state will collectively see $29 million in unpaid electric bills forgiven now that electricity provider Griddy has filed for bankruptcy. 

“My office sued Griddy Energy, under the Texas Deceptive Trade Practices Act, to hold them accountable for their escalation of last month’s winter storm disaster by debiting enormous amounts from customer accounts as Texans struggled to survive the storm,” Paxton said in a statement. “I ensured that Griddy’s proposed bankruptcy plan takes an important step forward by offering releases to approximately 24,000 former customers who owe $29.1 million in unpaid electric bills. 

Paxton added that consumers who already paid high bills connected to the winter storm could see additional relief. 

“Griddy and my office are engaged in ongoing good faith negotiations to attempt to address additional relief for those Griddy customers who have already paid their storm-related energy bills,” he said. 

Griddy powering down

According to Griddy Energy’s bankruptcy filing, the company will “release all outstanding payment obligations for those Texas consumers who were unable to pay their energy bills due to the high prices charged during the storm.” 

After a major winter storm swept through Texas, many customers received sky-high electric bills. One customer who received a bill of nearly $10,000 sued Griddy and argued that the company "failed to shield consumers from excessive electrical bills.” 

In the wake of the storm, Texas Gov. Greg Abbott took steps to address the outrageous utility bills. “We have a responsibility to protect Texans from spikes in their energy bills that are a result of the severe winter weather and power outages,” he said at the time. 

Abbott celebrated Griddy’s recent action and said he “will continue working with the legislature to resolve remaining claims.”

Texas consumers are feeling the back end of a one-two punch. Last week, they went days without electricity as frigid temperatures pushed the electric utility grid to the breaking point. Now they are receiving sky-high electric bills, some for thousands of dollars. Texas officials say they want some answers.

Over the weekend, Texas Gov. Greg Abbott held talks with some members of the state legislature to discuss the spike in energy bills affecting Texans, many of whom received the bills after enduring days of shivering inside their homes with no electricity.

“We have a responsibility to protect Texans from spikes in their energy bills that are a result of the severe winter weather and power outages," Abbott said following the meeting, which he called productive. “We are moving quickly to alleviate this problem and will continue to work collaboratively throughout this week on solutions to help Texas families and ensure they do not get stuck with skyrocketing energy bills.”

Variable-rate power plans

The consumers getting hit with huge electric bills are those who enrolled in their utility company’s variable-rate power plan. Under these plans, utility customers pay for electricity based on the wholesale cost the utility pays.

Usually, it saves them money. But during last week’s deep freeze that gripped the entire state, the wholesale costs of electricity surged. Many of the residents are getting bills for thousands of dollars. According to the New York Times, one customer got a bill for nearly $17,000.

State regulators may have also played a role. A week ago, as temperatures were plunging across the state, the Texas Public Utility Commission ordered the Electric Reliability Council of Texas (ERCOT) to alter its pricing structure, which it said was not working in these extreme conditions.

“The Commission directed the Electric Reliability Council of Texas to modify pricing models to more accurately reflect the scarcity conditions in the market,” the commission said in a statement. “Specifically, the Commission directed ERCOT to ensure that firm load being shed in ERCOT’s Energy Emergency Alert Level 3 operating condition is accounted for in ERCOT’s scarcity pricing." 

Huge increase in the cost per kilowatt-hour

As a result of that order, the standard price of electricity in Texas jumped from an average of 12 cents per kilowatt-hour to $9.

Abbott said the state leaders attending the weekend teleconference agreed that the state must take steps to alleviate at least some of the burden facing Texas utility customers. Some consumer advocates, meanwhile, are targeting utility companies that marketed variable-rate plans, calling them “predatory.”

A Dallas County Judge, Clay Jenkins, took to Twitter to ask Texans affected by high energy bills to provide details, including the name of their electricity provider.