Winter Heating Costs Could Jump as Much as 12%. These Households Will Feel It Most.

Home heating bills could rise as much as 12% this winter. (Dreamstime)

Key Points

• Households using electricity for heat face the largest cost increase, with winter bills projected to rise 5% to 12%, to between $1,144 and $1,223.
• Natural gas prices are projected to increase 3% to 8.4%, affecting 46% of households, with costs ranging from $671 to $704.
• Propane and heating oil costs are expected to decrease by up to 4%, though overall bills remain highest in coldest regions.

A cold start to winter in parts of the U.S. is raising concerns about households facing higher heating costs in the frigid months ahead.

While the National Weather Service isn’t predicting a particularly cold winter overall, retail prices are expected to rise for those relying on electricity or natural gas. In contrast, costs for those using propane or heating oil are expected to stay about the same or fall slightly.

Households heating their homes with electricity are likely to see the biggest hit, with overall winter fuel costs for the five month period ending in March expected to rise between 5% and 12% compared with last winter, to between $1,144 and $1,223, according to estimates from the U.S. Energy Information Administration and the National Energy Assistance Directors Association.

“These increases may not sound dramatic to higher-income households, but for families already struggling, they are devastating,” said Mark Wolfe, Executive Director of NEADA. “Millions of households are being pushed deeper into utility debt and closer to shutoffs simply because they cannot afford to keep their homes warm.”

Several factors are driving electricity prices higher, including surging demand from artificial intelligence data centers, higher costs for utility companies in California due to wildfires, and higher prices for natural gas —the main fuel source for power plants. Those living in the South, along with Arizona, Oregon, and Washington are most likely to have electric heat.

While electric costs will rise the most, higher prices for natural gas will have the broadest impact since it is the most widely used heating fuel across the country. Among the 46% of households who use it, the highest concentration is in Utah, where nearly 80% of homes rely on it.

Natural gas prices will rise between 3% and 8.4% to between $671 and $704, according to separate estimates from EIA and NEADA. Natural gas prices hit a three-year high in early December before pulling back in recent weeks, on increased demand amid a cold snap. The U.S. has been exporting much of its natural gas, which has tightened domestic supply, and prices are volatile.

Meanwhile, those who rely on propane and heating oil will get a break, with prices falling as much as 4% according to EIA. High inventories of propane are keeping those prices in check, while lower crude oil prices are pushing down the price of heating oil. Most heating oil in the U.S. is made from crude oil.

That’s not to say their fuel prices will be cheap. Because homes that use propane and heating oil are typically in the coldest parts of the U.S., including rural areas of the Midwest, Maine, and New Hampshire, their fuel bills will remain the highest in the nation overall at $1,291 on average for propane and $1,453 for heating oil this winter.

Write to Anita Hamilton at anita.hamilton@barrons.com