Name: Higher bills coming for a half-million Oklahomans in January
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Higher bills coming for a half-million Oklahomans in January

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Jack Money Maybe we are just spoiled.But changing metrics in both the global and the nation’s natural gas markets are beginning to financially impact Oklahoma electricity users.This week, Public Service Co. Of Oklahoma (PSO) announced it is increasing its fuel cost adjustment rider that its 550,000 customers pay on their monthly bills. The average residential customer will see about a $5 increase per month beginning in January.Natural gas prices are climbing, which pushes costs higher for homeowners who use the fuel to cook or help heat their homes, and also for other power providers that use a lot of natural gas to generate electricity.Simply put, times are changing, and consumers can expect to see other electricity and natural gas providers to follow PSO’s lead in increasing fuel cost adjustment riders.Global influencesAverage prices for natural gas per million British thermal units (MMBtu) climbed from $1.92 in September to $2.39 in October according to an energy outlook released by the U.S. Energy Information Administration. The EIA forecasts the January price will be $3.42/MMBtu and the average annual cost in 2021 will be about $1 more per MMBtu than it was this year.Higher prices in October reflect stronger demand for the fuel to support growing liquefied natural gas (LNG) exports as terminals resumed operations after shutting down in August and September because of hurricanes.As the demand increases, the supply is heading in the opposite direction.The agency estimates storage in the coming year will be about 16% lower than the five-year average.Even though the EIA expects average daily domestic use of the fuel to be lower in 2021 than it was this year, it predicts the trim on storage because there could be less natural gas produced from domestic wells compared to what had been produced in previous years.Plus, it expects LNG exports will continue to increase, up 31% compared to 2020.At the same time, the percent of electricity generated using natural gas also has continued to climb, from 37% in 2019 to 39% this year. Because natural gas prices are increasing, power providers could begin using more coal to generate power during 2021, cutting back natural gas’ share of power generation to 33%.Analyst’s takeTony Say, president of Clearwater Enterprises in Oklahoma City, agreed market fundamentals will continue to nudge natural gas prices upwards into a range that consumers and producers haven’t seen for quite some time.Prices are headed higher because there just isn’t as much gas in the marketplace than during the past few years.“The primary culprit behind that is falling drilling rig counts because of lower oil prices,” Say observed. “Oil prices were headed lower the past year because of excess supply in the marketplace anyway, and once the pandemic hit, there was a significant drop in demand. When the glut of oil became much more apparent, capital for drilling projects started to disappear because the numbers no longer worked. As rig counts declined, new production quit entering the market, and that really crimped the output of associated natural gas that comes along with the oil that was getting produced.“That dynamic hasn’t changed, and you can’t just start drilling again like flipping a light switch. There is no incentive really to drill for anything today at today’s prices, even with natural gas prices moving higher.”He attributed the tightening market to increasing LNG exports, as well, adding that a less-confrontational relationship between the U.S. and China could boost export growth further.Say noted current available supplies are lower than the five-year average and that the weather is turning colder and expected to remain cold through January, meaning, “we will see a fairly robust takeaway on the storage side with some pretty hefty withdrawals. We believe there will be a pretty good dent in what is stored because of that colder weather.”Fuel costs routinely changePSO’s notification that it would increase the amount it collects for fuel costs is nothing unusual, given regulated electric and natural gas utilities are allowed to adjust what their customers pay on those costs as market prices shift higher or lower.Since 2017, regulated utilities only increased a fuel cost recovery rider on customers four times. Liberty Utilities’ Empire District Electric utility, which serves 4,686 customers in Craig, Delaware and Ottawa counties in far northeast Oklahoma, increased its fuel cost rider in October, while Oklahoma Gas and Electric increased its rider in January. The last time PSO increased its fuel cost rider was in May 2017.“We understand any change to rates can be concerning for customers, and we are continually monitoring fuel costs to assure customers are paying no more or less than the actual costs,” said Matthew Horeled, PSO’s regulatory and finance vice president.“At the beginning of 2020, fuel costs were at historically low levels. Now, as natural gas prices continue to rebound into 2021, we’re beginning to reduce the gap between today’s actual fuel costs and where they were prior to 2020.”Horeled said PSO, which serves customers across most of eastern and southwestern Oklahoma, will review its fuel costs in a few months to see if additional adjustment might be necessary. The regulated utility is prohibited from making a profit on fuel costs, he noted.Business Writer Jack Money covers Oklahoma’s energy and agricultural beats for the newspaper and Oklahoman.com. Contact him at jmoney@oklahoman.com. Please support his work and that of other Oklahoman journalists by purchasing a subscription at oklahoman.com/subscribe today.

Jack Money Maybe we are just spoiled.But changing metrics in both the global and the nation’s natural gas markets are beginning to financially impact Oklahoma electricity users.This week, Public Service Co. Of Oklahoma (PSO) announced it is increasing its fuel cost adjustment rider that its 550,000 customers pay on their monthly bills. The average residential customer will see about a $5 increase per month beginning in January.Natural gas prices are climbing, which pushes costs higher for homeowners who use the fuel to cook or help heat their homes, and also for other power providers that...

Higher bills coming for a half-million Oklahomans in January

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