Simplified: The price of natural gas went up dramatically in the last year, which means it's more expensive to heat your home this winter than it was a year ago. Here's a closer look at some of the forces at work and suggestions to help you save energy and money.
Why it matters
- The cost of natural gas is the highest it's been in years, said Geoff Greenwood, spokesperson for MidAmerican Energy. It's a direct contrast to where prices were a year ago, when gas prices hit near-historic lows.
- Those costs get passed on to homeowners, Greenwood said. South Dakotans' gas supply charge – i.e. what people pay for how much energy they use – went up 170 percent between December 2020 and December 2021.
- By comparison, electricity costs have stayed steady. Though the rising natural gas costs along with rising inflation will impact the industry, the impact to consumers won't be nearly as dramatic as it is on their gas bill.
"We're able to spread the cost of (economic) volatility over a large consumer base," said Chris Studer, public relations officer for East River Electric Cooperative.
So, why is gas so expensive right now?
Like any economic trend, it's complicated, but at the end of the day it can also boil down to supply and demand.
- In the winter, demand for gas is higher as people need to heat their homes.
- The supply right now is where things get tricky.
Ok, what's affecting the supply of natural gas?
Production and storage haven't kept up with demand, Greenwood said.
There are also still residual impacts from the early 2021 polar vortex that hit the southern part of the country and skyrocketed the demand – and, thus, the cost – of natural gas.
There's also the comparison to the year prior.
When the pandemic hit in early 2020, many factories closed down or reduced capacity. As a result, demand for natural gas – and thus, the cost – went down.
Now, those factories are back up and running. People are returning to work, and all of that is adding more demand to the supply-demand equation.
Why isn't electricity as impacted?
While both gas and electric companies charge customers based on usage, the way rates are set differ between the two.
- Supply rates for gas, as mentioned above, are highly dependent on what prices the market dictates at any given point in time.
- Consumer base rates for electricity – i.e. about 75 percent of your electric bill – are fixed and can only change when a company gets approval from the South Dakota Public Utilities Commission.
That's not to say your electric bill hasn't gone up.
- Xcel Energy recently received approval to update its rider rate to cover the cost of infrastructure investments, spokesperson Lacey Nygard said in a statement, adding that fuel costs on a customer's bill are also increasing.
Here are some tips to lower your energy costs
Both Greenwood and Studer shared tips for keeping usage down around your house. Here's a list:
- Get your furnace checked. Make sure it's running efficiently and has a clean filter.
- Set your water heater temperature to 120 degrees.
- Take shorter or less-hot showers.
- Consider purchasing a smart thermostat to help regulate the temperature throughout the day and lower it when you're sleeping or away.
- Consider dialing the thermostat back even a degree.
- Address drafty windows and doors as best you can to keep the heat inside your house.
Need more help?
The federal government has a program to help low-income households pay for home heating. Contact the South Dakota Department of Social Services for more information.
MidAmerican Energy also has some assistance available for customers, and, if you're able to contribute to help those who can't afford their gas bill, the company also has an "I Care" program where customers can make donations.