More utilities are announcing that they're raising electricity supply rates in anticipation of another bone-chilling winter in the Northeast. It could mean another year of expensive heating bills for many consumers. It doesn't have to be though. How do you avoid it? Residents who live in areas with energy choice can look for an energy plan with a fixed rate that will stay the same no matter how cold the upcoming months get.
Why energy rates skyrocketed last winter
The polar vortex of 2013-14 sent many home and business owners into shock with inconceivably high heating bills. It wasn't just that people were consuming more energy by turning up the heat to combat the record-breaking low temperatures. They were also paying higher variable rates for their electricity, because the price of electricity generation spiked during this time. In essence, supply and demand was to blame for the high bills.
When customers turned up the heat to stay warm, the utilities and suppliers needed to find more electricity to meet this high demand. Generators where they usually get electricity were running at capacity and couldn't produce more. Some plants couldn't produce at all because the cold shut them down. Many natural-gas fired plants couldn't make as much electricity because they ran out of natural gas to operate. In the Northeast, there is limited capacity of natural gas due to a shortage of pipelines in the area to bring in the natural gas supply. When gas-fired plants had to buy natural gas on the spot market, they were paying prices up to 878% higher than the 12-month average – prices that were passed on to the utilities and suppliers and eventually to the consumers.
What can be done this year?
This winter again is predicted to be cold and stormy in the Northeast, which could lead to similar conditions as last winter. Consumers can prepare in several ways.
Install a programmable or smart thermostat: A thermostat that you can set and forget is an easy way to stop household members from fiddling with the thermostat controls. With a smart or programmable thermostat, you can set a cooler temperature during the day when you're not home and program it to warm up just before you come home.
Add insulation: Insufficient insulation in your attic and walls could mean you're letting warm air escape. Just like adding a blanket to the bed keeps you warmer, adding insulation to your attic keeps your house warmer in winter (and cooler in summer). Make sure your insulation is the proper R-value – in the Northeast it should be R-38 or higher.
Stop air leaks: Feel around windows, doors, chimneys and even electrical outlets for signs of drafts, which can account for 5-30% of a home's energy loss. Cheap ways to stop air leaks are to seal gaps around windows with caulk or sealant tape and add a rubber strip to the bottom of a door.
Enroll in a fixed-rate plan: If you are in an area that allows residents to shop around for energy supply, take advantage by looking for a fixed-rate plan. This type of plan keeps its supply rate the same throughout the contract term, even if the market price of electricity skyrockets. A variable-rate plan, month-to-month plan and many utility options can change the price of electricity every month to reflect current market pricing. If the current market price is exorbitant then your bill will be too!
If you enroll in a 12-month plan before temperatures drop, you'll most likely find a good price that will last you through the cold months.