Illinois residents have started to see double-digit rate spikes on their heating bills. A number of utility service areas have raised rates, putting a strain on pocketbooks all over Illinois. Last November, Crain's reported that natural gas rates would rise, but actual rate increases have blown utility predictions out of the water.
Those in the Peoples Gas service area have been hit the hardest. Natural gas rates in April spiked to $1.19 per therm from March's rate of 93 cents, according to historical pricing data from the Illinois Commerce Commission.
That in and of itself is a major price hike, but it gets even worse when you consider that year over year, the gas rate has more than doubled for Peoples Gas customers. In April 2013, these customers were paying only 42 cents per therm, a difference of 77 cents. In other words, if you use 100 therms in April, you can expect to pay $77 more for your natural gas than you did at this time last year.
Other utilities have raised prices too. North Shore prices doubled year over year, increasing from 47 cents last April to $1.21 in April 2014. Nicor Gas rates didn’t fare much better with customers experiencing a rate increase of 20 cents in the last year.
A large portion of this rate hike can be blamed on cold weather. The relentless series of winter storms that struck Illinois caused people to use more natural gas than usual. More consumers stayed indoors, increasing the need for heat. Extreme temperatures made it difficult to keep homes warm so heating units worked longer and harder, using more of the commodity. Even water heaters added to the bill, as cold pipes and faucets made heating water more strenuous.
The added demand and dwindling supply of natural gas put a strain on the energy infrastructure and caused the price of the commodity to rise to a premium. Because utilities had to purchase more expensive gas, the cost was passed on to consumers.
But that's not the only thing driving up energy bills in Illinois. In June 2013, the ICC approved a $56 million rate hike for Peoples Gas customers. The increase, which is tacked on to the utility's delivery rate, adds an average of $4.40 cents to customers' bills each month. The ICC also approved $6.6 million in additional revenue for North Shore Gas, adding about $2.50 to the average energy bill. These are not exactly bank-breaking numbers, but they have still contributed to the increase in energy costs.
Utility rates aren't the only option for Illinois residents though. When the state deregulated its energy market in the 1990s it gave consumers the option to purchase natural gas in a competitive market. Perhaps the largest benefit of this opportunity is the creation of fixed-rate energy plans. Just as a fixed-rate mortgage protects against fluctuating interest rates, these plans allow price protection from the ups and downs in the energy market.
Those who are on fixed-rate plans from natural gas suppliers were spared from the major supply rate hikes due to the unusually cold winter. Despite the increased cost of natural gas in the market, those customers remained on a stable rate, month over month.
Even now with the worst of the cold weather over, customers who switch to a fixed-rate plan may be able to save over their utility rate. The ICC reports that customers in some areas can enroll in a 12-month fixed-rate plan for 51.9 cents per therm.