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Help, It’s Cold: How High is My Electric and Gas Bill Going to Go?

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Summary:

2014 brought the polar vortex to our vocabulary, and with the continuing bitter cold in the Eastern half of the US, most of us are wondering: what’s going to happen to my electric and gas bill?

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Colder than normal January

2014 brought the polar vortex to our vocabulary, and with the continuing bitter cold in the Eastern half of the US, most of us are wondering: what’s going to happen to my electric and gas bill?

The short answer is that it’s not going to be pleasant in the near term, and probably not in the longer term either. How bad it will be depends on where you live and whether you’ve locked in prices for your electricity and natural gas supply.

The colder it is, the more electricity and natural gas we consume. Based on ClearlyEnergy’s estimate, electricity consumption this January should be 7-8% higher than in a “normal” East Coast January. Why? The weather is bad which means more electricity is used for lighting and other indoor activities, and also to circulate the air or water heated by furnaces.

For natural gas, our estimate is that consumption will be at least 10% above normal, primarily because furnaces are working overtime to keep houses warm. However, since last January was unusually mild, natural gas consumption on your next utility bill will likely be more than 20% higher than last year’s, ouch!

If utilities rates were a steady constant, this would be the end of the story, but how much you pay depends on how much you consume and how much each unit of electricity or gas costs. If you’ve locked in a rate using ClearlyEnergy's search tool, the odds are good that you are paying less for your electricity than you did last year. If you are still on your utility’s service, States such as Maryland or Connecticut only change their rates every couple of months and prices don’t vary with the weather, but New York’s rates notably do. On the days this month with temperature lows of four degrees and highs in the teens, the prices ConEd residents will get billed for their power were up to six times higher than on the warmest January days: when you consume the most is also when you pay the most … a great incentive to lock in rates!

Northeast Residential Gas Consumption

With natural gas, rates are typically set by the utilities a month in advance but then adjusted to reflect actual market prices. With insanely cold weather come insanely high gas prices, and while you may not see those prices reflected on your January utility bill, they will undoubtedly show up in February or March as the utilities trues-up their costs, ouch, ouch, ouch … . This is another incentive to lock in a natural gas rates, something which we’re working very hard to offer in the coming days, which is probably the only positive note of this entire blog post!

By Veronique Bugnion, co-Founder ClearlyEnergy. You can find me on Google+

Photo credits: guvnah on Flickr, Thomson Reuters

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