CenterPoint Energy, the state's largest provider of natural gas, said Thursday that it expects the average residential customer's bill will increase this winter by 42%, from $92 a month to $131, mainly because of rising natural-gas prices.
CenterPoint has 400,000 residential and business customers in Arkansas.
The 42% increase is the largest in several years, Ross Corson, a CenterPoint spokesman, said. "These increases are not just in Arkansas but across the U.S. and globally."
The average increase is based on an assumption that a consumer whose average bill was $92 a month last winter will use the same amount of natural gas this winter season, generally from November through March, CenterPoint said. The estimate also is based on normal winter weather.
"The actual bill impact will vary by customer depending on the size and age of the home, number of gas appliances, number of people in the household, thermostat settings, levels of insulation and other factors," the company said.
The utility announced its expectations for the price increase in a news release that also sought to alert customers who believe they might have trouble with their bills to begin working with CenterPoint now on payment plans and other possible aid.
"We really want people to know it's better and easier to start working on this earlier rather than later," Corson said.
There is no estimate on the increase facing businesses, Corson said, because a 'business' can range from a small storefront property to a vast manufacturing plant.
In its Winter Fuels Outlook released Oct. 25, the U.S. Energy Information Administration said U.S. households will spend an average of $746 on heating this winter. That's $172, or 30%, than last winter.
"Higher retail natural gas prices are the primary driver for the expected increase in natural gas heating expenditures this winter," the agency said. "On average, retail natural gas prices in the United States are expected to rise from $10.17 per thousand cubic feet (Mcf) last winter to $12.93/Mcf this winter, the highest price since the 2005-06 winter average."
The agency said the largest increases are likely to be in the Midwest, with the average winter residential cost increasing from about $550 to $800. The smallest increases are expected to be in the South, with the average residential bill for the winter months rising from a total of about $500 to $600.
The agency, citing U.S. Census Bureau figures, said 48% of U.S. households primarily rely on natural gas for heating.
"The increase in retail prices reflects rising natural gas spot prices over the past year," the agency said. "Changes in natural gas spot prices typically get passed along to retail rates over a period of months because of regulatory rate structures. Utilities generally cannot profit or lose money from natural gas commodity sales, whose costs are passed along directly to the consumer."
Corson, the CenterPoint spokesman, said natural gas prices have been "very low and relatively stable" for the better part of a decade. "We had the much-increased production of natural gas in the U.S., so supply has been abundant," he said. "This year, those prices have gone up. Right now, there's a supply-demand imbalance with production going down during the pandemic and, in the meantime, demand has gone up."
CenterPoint, as a public utility regulated by the state Public Service Commission, is not profiting from the increase expected this winter, he said. Increases brought on by market conditions are subject to PSC approval.
"That [42%] increase largely represents the current and expected market price for natural gas," Corson said. "We purchase natural gas in the market on behalf of our customers and deliver it to their homes and businesses. The price we pay in the market for that natural gas is the same price our customers pay. There is no markup on the purchase."
The state received several inches of snow in mid-February and went through an extended period of freezing temperatures, but the harsher-than-normal winter has no direct relationship on the price increases expected this winter, Corson said.
"Only to the extent there were extraordinary costs incurred by utilities," he said. "There were restricted supplies and there was a sudden, dramatic increase in prices." The Public Service Commission this spring approved a recurring surcharge on customers' monthly bills for natural gas providers to begin recovering those costs, Corson said.
CenterPoint said customers anticipating trouble paying this winter's bills should contact the company now to set up a levelized monthly payment plan or seek payment assistance at 800-992-7552. Financial help also could be sought through the Low Income Home Energy Assistance Program funded by the federal government and operated by 15 community action agencies in Arkansas. CenterPoint said it will direct customers to the community action agency in their area.
"We encourage our customers to prepare now for the winter heating season ahead," Cindy Westcott, CenterPoint's vice president for operations in Arkansas and Oklahoma, said in a news release. "Whether it's payment assistance options or energy efficiency improvements, we're available to help our customers manage their heating costs."