Get Ready For A Higher Heating Bill This Winter, Government Warns

WASHINGTON (CBS) -- Expect to pay more to heat your home this winter than you spent last year.

That's the message from government analysts who sifted through forecasts for a colder winter and slightly higher energy prices.

The Energy Department said Thursday that household bills are likely to be higher for all four main heating fuels — natural gas, electricity, heating oil, and propane.

Last winter, above-normal temperatures reduced nationwide demand for heating fuels to the lowest level in at least 25 years. For most regions outside the West, this winter is expected to be more typical — colder than last winter although still milder than many recent ones, according to forecasters with the National Oceanic and Atmospheric Administration.

If winter turns out to be colder than expected, however, heating bills could soar.

In Portland, Maine, William Foss had insulation wrapped around his heating ducts this summer and set aside money to survive Maine's fickle winter weather and volatile fuel market. He usually tops off his 275-gallon oil tank about three times, sometimes with help from federal subsidies, and he was rattled by the forecast of higher heating bills.

"Right now, I've been thinking I'm going to be OK," the 69-year-old said. "There's not much we can do about it if the weather turns cold all of a sudden."

Here is the Energy Department forecast for average household heating bill from October through March:

— Natural gas: up 22 percent, or $116, to $635 on a national average. However the average bill in the Northeast is expected to rise 29 percent, or $198, to $889. If winter is colder than NOAA predicts, the increases would be 31 percent nationally and 38 percent in the Northeast.

Nearly half of all American homes are heated with natural gas. The price of gas is expected to rise a modest 11 percent over last winter, but still that would be the highest average winter price in six years.

Pipeline bottlenecks have slowed the delivery of gas to the Northeast in past years. The energy agency said that more gas from Pennsylvania will be available for New Englanders this winter due to a new pipeline expected to open next month.

— Heating oil: up 38 percent, or $378, to an average $1,370.

Only 5 percent of U.S. homes use heating oil, but it warms nearly one-fourth of homes in the Northeast. The bad news for them: The retail price is up by 42 cents per gallon, or 20 percent, since last winter because of higher crude prices. And if the weather forecast is right, Northeast residents will burn more oil.

James Bambino, managing editor of S&P Global Platts, which tracks energy prices, said he is telling friends to lock in their heating-oil prices now.

Prices aren't likely to fall much because inventories are relatively high, Bambino said. But, he added, "if February rolls around and there's a massive cold snap and everybody needs to buy heating oil from the same distributor, then the prices go up."

— Electricity: up 5 percent, or $49, to $945 due to higher consumption. Rates are expected to be flat.

Nearly 40 percent of U.S. households heat with electricity including more than 60 percent in the South. In New England, more power is now generated with natural gas, making heating with electricity competitive with simply burning the gas to stay warm.

— Propane: Lower than most years, but higher than last winter, when temperatures were mild and prices low.

In the Northeast, the forecast calls for an average increase of $346, or 21 percent, to $1,991; in the Midwest, it's $290 more, or 30 percent, to $1,272.

— Wood and wood pellets: used to heat about 2.5 million U.S. homes including one-fifth of rural households in New England. The energy agency didn't offer a cost forecast.

It is important to remember that the figures are averages. The national estimates include Michigan and Minnesota but also Texas and Arizona, where people put on parkas if the temperature dips below 60.

And they include all kinds of dwellings — a consumer with a 3,500-square-foot house is likely to pay more than the average, while an apartment renter will usually pay less.

For the individual consumer trying to budget, it is more helpful to look at the expected increase in percentage terms and apply that to his or her bill, said Energy Department spokesman Tim Hess.

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David Sharp in Portland, Maine, contributed to this report.

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