South Dakota’s Public Utilities Commissioners are advising natural gas customers to prepare for rising prices in the coming months and to take steps now to ensure bills remain manageable.
Natural gas prices are primarily determined by the market. The PUC’s natural gas rate authority is limited to factors related to natural gas delivery, which account for roughly 30% of the overall cost. The other 70% is determined by numerous market factors like supply and demand, weather, production, storage levels and imports and exports.
Experts have identified high global demand, a growth in the consumption of natural gas that outpaces production and record level exports of liquified natural gas as some of the biggest contributors to the rise in natural gas prices expected this winter.
Ways to lower natural gas and electric consumption include setting your thermostat to a lower temperature, maintaining and upgrading appliances for greater energy efficiency, changing furnace filters, adjusting your water heater tank’s temperature and conserving hot water.
Chairman Chris Nelson says part of the increase in demand can be attributed to an increased reliance on natural gas for electricity generation. Traditionally, natural gas was most in demand for heating purposes during colder months with nearly half of all US homes still relying on natural gas as their primary heating fuel source. He says it has also become the largest source of electricity generation in the US accounting for nearly 40% of all utility-scale electricity generation. This change makes the commodity highly in-demand year-round and decreases the capacity available to be stowed away in preparation for winter.
Vice Chairperson Kristie Fiegen says current events can also have a big impact on commodity markets, even when those events are happening halfway around the world. The current status of the global natural gas market is a perfect example of that. She says Europe is in the midst of a natural gas crisis due, in part, to the ongoing conflict between Ukraine and Russia. Europe is heavily dependent on Russian gas, a commodity that’s been largely unavailable or extremely expensive since Russia’s invasion. As a result, the US has increased exports of liquified natural gas to Europe which, in the end, contributes to higher prices at home.
PUC Commissioner Gary Hanson says they highly recommend South Dakota customers take the time to prepare for these higher expenses now. Steps like taking a fresh look at your budget, installing a programmable thermostat, or contacting your utility company to ask about a budget billing plan that helps spread out higher utility costs over several months rather than having to pay it all at once can make a big difference. He says completing a home energy audit is another great way to identify any air leaks, simple fixes or upgrades that could save you money in the long run.
See a list of frequently asked questions about natural gas pricing on the PUC’s website at https://puc.sd.gov/Publications/naturalgaspricesfaq.aspx. For additional tips on conserving energy and information on energy efficiency programs, contact your local utility company.
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