Heating costs may not rise this winter

Iowans likely won't see much change in heating costs this winter, the state's two largest utilities say.

MidAmerican Energy projects a 3.7 percent decrease in the average residential customer's natural gas costs from Oct. 1, 2010 through April 30, 2011 versus year-earlier levels, spokeswoman Ann Thelen said. That's a reduction of $23 for the entire heating season, to approximately $589 versus $611 in the 2009-2010 heating season.

Alliant Energy's average residential natural gas customer spent about $620 to heat their home from Oct. 1, 2009 through March 31, 2010, company spokesman Steve Schultz said, and that's about the amount they are expected to pay this year.

“Essentially, what we're expecting at this point is that natural gas prices will remain the same,” Schultz said.

The United States Energy Information Administration's annual heating cost forecast is due Wednesday. It is expected to cover costs not only for natural gas, but for other heating fuels such as liquid propane and No. 2 heating oil.

Iowa's largest natural gas utilities say the key factors they see going into winter are high national storage inventory levels for natural gas and depressed natural gas demand due to the recession. MidAmerican Energy says that pipeline capacity has also improved, enabling more natural gas to reach consumers.

Unpredictable weather makes it difficult to forecast winter heating costs.

Hurricanes that sometimes force natural gas producers to shut down oil production and suspend inventory buildups have not been much of a factor this year, Schultz said.

The National Weather Service forecasts above normal temperatures during the next few months in the central United States consistent with a La Nina weather pattern.

The amount of natural gas in storage nationally is about 4 percent below last year's record levels, according to Alliant Energy's Schultz. He said Alliant has been preparing its natural gas operations for winter as it has in the past, buying natural gas for storage when prices are low.

MidAmerican Energy said its use of natural gas storage and financial hedging will secure the price of about 65 percent of the projected natural gas demand of its customers for the heating season.

As of Oct. 1, stocks of liquid propane were 8.9 percent lower in the United States than a year earlier, according to the Energy Information Administration. Residential propane prices were running 29 cents higher than a year ago, at an average of $2.35 per gallon, while wholesale prices were 32 cents higher than a year ago at $1.31 per gallon

Heating oil prices as of Oct. 1 averaged $2.91 per gallon, up 41 cents per gallon from a year earlier. The wholesale cost of heating oil was up 49 cents per gallon, at $2.35.

The EIA last projected that propane prices will rise to more than $2.70 per gallon in February and stay in the $2.60-$2.70 per gallon range through March.

Heating oil costs are expected to peak above $3 per gallon nationally in January, according to the EIA, easing off only slightly in the remainder of the heating season.