Americans got a stark warning from the government this week: Expect higher heating bills this winter.
According to the Energy Information Administration, nearly half of U.S. households that warm their homes with mainly natural gas can expect to spend an average of 30% more on their bills compared with last year. The agency added that bills would be 50% higher if the winter is 10% colder than average and 22% higher if the winter is 10% warmer than average.
The forecast rise in costs, according to the report, will result in an average natural-gas home-heating bill of $746 from Oct. 1 to March 31, compared with about $573 during the same period last year.
The forecast is part of the EIA’s winter fuels outlook, which projects that U.S. households will spend more on energy this winter than they have in several years. The agency attributed its forecast to rising energy prices—natural-gas futures have this year reached a seven-year high—and the likelihood of a more frigid winter than what most of the country saw last year.
The looming increase, on top of rising prices for many consumer goods and commodities, is likely to cause stress for Americans at many income levels. Economists warn that the larger utility bills are most likely to affect those households still hobbled by the Covid-19 pandemic.
A paper published this summer in the Journal of Public Economics, which studied five million electric-utility customers in Illinois, found that disconnections had doubled during the pandemic. In 2018-2019, customers in majority Black and Hispanic ZIP Codes were about four times more likely than less-diverse neighborhoods to be disconnected for nonpayment.
“We are very concerned about the affordability of heat this winter for all customers, but in particular those who struggle every day to afford their utility services,” says Karen Lusson, a staff attorney for the National Consumer Law Center, a nonprofit that advocates on consumer issues for low-income communities.
What can consumers do to prepare for what is to come? Here is what trade groups, energy professionals, financial planners and others have to say.
The first thing you can do, says Barton James, president and chief executive of Air Conditioning Contractors of America, a trade group, is make sure your home’s heating system is operating correctly.
According to the National Institute of Standards and Technology, improper installation of heating, ventilation and air conditioning systems can lead to a 30% increase in energy use.
“Now more than ever, I think it pencils out well for someone to stay on top of the service and maintenance with their equipment,” says Mr. James.
He says consumers should ask their contractors to perform a process called a Manual J, which calculates the amount of heating and cooling output required for your home. The process can cost anywhere from $100 to around $1,000 depending on the size of the building. According to Ms. Lusson, some utility customers pay into programs through their regular bills, allowing them to summon a company representative to perform an energy-efficiency assessment and make recommendations.
There are relatively inexpensive ways consumers can make their living spaces more energy-efficient, says Vivek Shandas, a professor at Oregon’s Portland State University who studies the effect of climate change on cities and households. Steps include covering windows with plastic to stave off drafts and buying “door pillows” to plug the space under doors.
“Tightening the envelope of the house is generally how it’s considered,” says Mr. Shandas. “How do I weatherize my home so I reduce the exposure that I have to that cold?”
Some parts of the country might be more susceptible to rising natural-gas prices than others. For consumers who might feel the brunt of price increases, Mr. Shandas recommends looking at courses of action to help you navigate the cold-weather months.
“What are the places where I can get the same result, but I can compromise a little bit?” he says. Those ideas might include using less gas to cook, commuting to work through carpooling and mass transit rather than riding solo in your car, or keeping the thermostat at a bearable level—as opposed to the ideal level—when it is cold outside.
Angela Moore, a certified financial planner and founder of Modern Money Education, a platform that administers personal-finance courses for women, advises consumers to look for other budget items that can be scaled back to accommodate a higher natural-gas bill. She advises checking expenses humming in the background—subscriptions or a gym membership you aren’t using—that might pay for a bill increase if they were suspended for a few months.
“A lot of people just forget about some of these things because it’s so automated and we’re kind of like on autopilot,” says Ms. Moore.
Mr. Shandas acknowledges that for higher-income Americans, the natural-gas price increases will be a drop in the bucket.
Ms. Lusson at the National Consumer Law Center points to numerous federal programs that consumers can tap to receive assistance with utility bills if they meet the income requirements. One of the most well-known of these, the Low Income Home Energy Assistance Program, requires that recipients’ income doesn’t exceed 60% of their state’s median income.
In addition, some states have discounted-rate programs such as a percentage-of-income payment plan, says Ms. Lusson. That program can keep bills affordable and forgive past-due amounts if the applicant pays the discounted rate on time for a year.
Consumers should visit their local community-action committees, she says, for information on programs for which they might qualify. “So many people who weren’t low-income before became low-income during Covid,” she says.