Get Ready for Winter Heating Bill Sticker Shock

For months now, West Virginia’s severance tax collections for energy production—primarily coal and natural gas—have been running way ahead of estimates.

The state finished the fiscal year June 30th with $769 million in severance tax revenue, 233 percent ahead of estimates. The state has collected $272 million in severance taxes the first three months of this fiscal year. That’s 574 percent ahead of estimates.

The dramatic surge is attributable to increased global demand, which has driven prices to historic highs. Those higher prices mean more tax money for the state. However, the other side of that equation is now hitting home.

“Nearly everybody in the U.S. can expect to pay significantly more—often hundreds of dollars—on their heating and energy bills this winter—fueled by a global energy crisis and the fastest growing inflation in 40 years,” Time Magazine reported.

The National Energy Assistance Directors’ Association (NEADA) estimates that home heating costs will rise by an average of 17 percent over last winter, marking the second year in a row of a major price increase. Between 2020 and 2023, NEADA estimates home energy prices will have risen by 35 percent.

West Virginia may be sitting on top of enormous supplies of coal and natural gas, but the Mountain State is not immune from the impact of global demand and, subsequently, higher prices for energy.

The state Public Service Commission this week is considering a request by Appalachian Power and Wheeling Power to increase their annual rate for electricity by nearly $300 million. If approved, the average monthly bill for a residential customer using 1,000 kilowatt-hours would rise by nearly $19, to $174.

The PSC is pressing natural gas companies to find ways to mitigate the spike in the cost for their service. One option is spreading out the price increase over a long period of time. “This is the best that we could come up with because of the price of the gas, the commodity price, that we have to buy at this time,” said Moses Skaff, Mountaineer Gas Senior Vice President.

The higher natural gas prices will vary from company to company and region to region, however, NEADA estimates that U.S. households’ gas bills will run about one-third higher than last winter, on average.

Families do not have many options for holding down costs, other than turning down the thermostat. “You can’t switch the way you heat your home based on fuel prices,” said Mark Wolfe, executive director of NEADA.

There is, however, help for lower income families.

Utilities typically have assistance programs. For example, FirstEnergy, which operates Mon Power and Potomac Edison electric companies in West Virginia, “urges residential customers experiencing financial hardship to contact their utility as soon as possible to establish an affordable payment arrangement or obtain assistance.”

Utilities will also refer customers to several different government assistance programs. The most popular one is the Low Income Energy Assistance Program (LIEAP).  It operates through the state DHHR and “assists eligible households with the cost of home heating through direct cash payments or payments to utility companies on their behalf.”  LIEAP provided assistance for 150,555 West Virginians last fiscal year.

But for everyone else, get ready for heating bill sticker shock this winter.

 





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