Important Information from PECO – Preparing for Rising Winter Energy Costs

While energy prices have remained at relatively low levels during the past several years, multiple factors are poised to drive prices higher during the 2021-2022 winter heating season, and potentially beyond. These price increases will impact all consumers nationwide regardless of heating source.

Customers who use natural gas, fuel oil, and propane are anticipated to experience a pronounced increase in their bills, compared to what they have previously paid for winter heating costs. The Energy Information Administration (EIA) estimates that customers who heat with natural gas could spend on average 30% more to heat their homes than they did last year. Comparatively, the EIA estimates a 43% increase for those who use fuel oil and a 53% increase for those who use propane. The EIA anticipates a 6% increase for those who heat their homes with electricity.

This spike in natural gas prices is being caused by a combination of factors, from severe weather, which has disrupted supply, to natural gas producers not increasing production because of supply chain and workforce issues or business decisions. In addition, the U.S. is exporting increasingly significant volumes of natural gas via pipeline to Mexico and as LNG to Europe and Asia.

The increase in natural gas prices will also have an impact on the cost and price of electricity generation as well, given that natural gas is the primary fuel source for electric generation in our region.

While customers have experienced relatively low energy prices for the past several years, current commodity market trends are pointing to higher energy bills this heating season. These price increases will impact all customers nationwide during the 2021-2022 winter heating season, whether they use natural gas, electric, heating oil, or propane.

Natural gas prices, along with other heating fuels, are increasing worldwide, which is being caused by a combination of factors. The increase in natural gas prices is also having an impact on the cost and price of electricity generation as well, given that natural gas is the primary fuel source for electric generation in our region.

 On your PECO bill, the electricity or natural gas used by customers – or the commodity charge – makes up about half of a residential customer’s total bill. This is the portion of the bill that can be purchased from a competitive electric generation supplier (EGS) or competitive natural gas supplier (NGS).  Electric and natural gas distribution companies like PECO update the Price to Compare (PTC) information on a quarterly basis. This is the price customers can use to evaluate offers from competitive suppliers. For customers not purchasing their electricity or natural gas from a competitive supplier, these charges are passed along directly to customers at exactly the price that PECO pays.

 New electric rates took effect on December 1, 2021. The new Price to Compare increased to 7.021 cents per kWh. This is an increase of 0.424 cents per kWh or 6.4%. This is for the supply side of a customer’s bill.  For electric customers who do not use electricity to heat their homes, the rate increased by 0.424 cents per kWh. With these changes, the monthly electric bill for a customer using an average of 700 kWh increased by $2.94 per month, from $102.07 to $105.01, or by about 2.9%.For customers who use electricity to heat their homes, the rate increased by 0.424 cents per kWh. With these changes, the monthly electric bill for a residential heating customer using an average of 2,000 kWh increased by $8.40 per month, from $238.86 to $247.26, or by about 3.5%.

Natural gas commodity costs fluctuate – either increasing or decreasing – based on many factors including wholesale prices, when purchases are made, the amount of natural gas purchased, the length of purchases, weather, reconciliation of collections for actual versus forecasted energy use, and other calculations. PECO works to reduce volatility and purchases natural gas at the least cost possible for customers. This is done, in part, through a hedging program to procure natural gas supplies incrementally at fixed prices based on future costs and filling storage facilities during the summer months when natural gas prices are lower. These costs change quarterly, as market prices change. New natural gas rates took effect on December 1, 2021. The new Price to Compare will increased to 58.188 cents per 100 cubic feet (Ccf) of natural gas. This is an increase of 21.691 cents per Ccf or 59.4%. This is for the supply side of a customer’s bill. The rate increased by 21.910 cents per 100 cubic feet (Ccf) of natural gas. With these changes, the monthly natural gas bill for a residential customer using an average of 160 Ccf of natural gas increased by $35.04 per month, from $147.48 to $182.52, or by about 23.8%.

How does PECO manage costs?  First, PECO works in advance of the heating season to secure natural gas and electric supply to ensure we can safely and reliably deliver the energy customers need. From a natural gas perspective, this includes purchasing natural gas from multiple sources through several natural gas transmission pipelines and filling our storage facilities, to prepare for increased customer demand. In addition, we work to secure energy at the least cost possible for our customers.

From an electric perspective, PECO works to competitively procure least cost electric supply for customers by buying power in spring and fall Requests for Proposal (RFPs) through longer-term contracts. We only replace about 35 percent of the supply each RFP, which lessens the impact of any market price changes and is less volatile. This is a programmatic strategy that has been successful in reducing volatility for years. The increase in natural gas prices has an impact on the cost of electricity generation as well, given that natural gas is the primary fuel source for electric generation in our region.

What can customers do to prepare and manage these increases?

Energy Efficiency

• Customers can take advantage of our energy efficiency programs to save energy and money, including energy assessments that identify ways to save even more. To learn more about PECO’s residential programs to help you save energy and money visit http://www.peco.com/waystosave.
• Cold temperatures during the winter can cause customers to use more energy and experience higher bills, but by following a few simple tips and making straightforward energy efficiency improvements during the fall, customers could save 20 percent or more on their winter heating bills.
  • Keep it sealed. A poorly sealed house is costlier to keep warm. Caulk around doors, windows, and any openings for utility services. Using the locks on your windows helps make a tighter seal that is more resistant to drafts. If you have a fireplace, keep your damper closed when the fireplace is not in use.
  • Upgrade your insulation. Insulating your home can significantly reduce your heating costs, while also increasing the comfort of your home. Reducing air leaks – around floors, walls, ceilings, ducts, fireplaces, doors, windows, vents, and plumbing – could cut your home’s average monthly energy bill by 10 percent.
  • Check ducts for air leaks. Look for joints that are no longer connected. Leaky ductwork can increase your energy bill significantly.
  • Warm up your system. Service your heating system before winter begins. A well-maintained system will last longer, operate more efficiently, and save you money. The potential for carbon monoxide exposure is possible if home heating equipment is not properly tested, serviced, and maintained.
  • Manage your thermostat. Keep thermostats set at a comfortable level. You can save about two percent on your heating bill for every degree you lower your thermostat. When you are asleep or out of the house, try turning your thermostat back 10 to 15 degrees for eight hours to save approximately 10 percent on your heating bill. Consider investing in a smart thermostat that can connect to your mobile devices, helping you stay on top of your energy usage.
  • Be prepared for cooler weather. Remove screens and air conditioners from windows and install storm windows.
  • Do not heat unused areas. Close vents in unused rooms and shut doors to unused rooms, closets, and basements.
  • Take advantage of the sun’s heat. Open curtains on your south-facing windows during the day to allow sunlight to naturally heat your home and close them at night to reduce the chill from cold windows.
  • Shorter days and longer lights. Adjust outdoor lighting timers as the nights grow longer. Replace older incandescent bulbs with new energy efficient LED bulbs.

Monitor Usage

• Through PECO’s MyAccount at https://www.peco.com/myaccount, customers can track their energy use, set up high usage alerts, get tips on how to reduce energy costs, and learn which appliances use the most energy.

Shop for Energy

• Customers may be able to save money by shopping for natural gas or electricity with a competitive supplier.
  • Use the PECO Price to Compare to evaluate offers from competitive suppliers.
  • A customer’s individual Price to Compare is listed in the Message Center of their monthly bill.
  • To find competitive natural gas or electric generation suppliers or learn more about shopping for natural gas or electricity visit the Pennsylvania Public Utility Commission’s websites at www.pagasswitch.com or www.papowerswitch.com.

Bill Relief and Assistance Programs

• From the beginning of this pandemic, we have launched numerous customer assistance programs designed to help customers in need, such as new payment options that spread outstanding balance payments up to 24 months, with no money down and no interest charged.
• Those programs can still be accessed today and can help customers who are struggling to make ends meet.
  • In addition, budget billing makes short-term fluctuations in monthly bills easier to handle by dividing annual energy costs evenly throughout the year.
  • Residential customers should act now and can find out more about options online at www.peco.com/help.
  • Additional customer assistance programs include:
    • Customer Assistance Program (CAP): An annual credit for qualified customers based on household income and energy use.
    • Low-income Home Energy Assistance Program (LIHEAP): A federal cash grant program offering up to $1,500 to help low-income customers manage their energy costs and ensure service during the heating season.
    • Matching Energy Assistance Fund (MEAF): A program funded by voluntary contributions of customers and matched dollar for dollar by PECO for up to $1,000 in total assistance for those who qualify.
    • Customer Assistance and Referral Evaluation Services (CARES): A referral and information service designed to assist customers who have special needs or extenuating circumstances that prevent the payment of their utility bill.
    • Small Business Gas Grant Program: Beginning in December, small business customers are eligible to apply for a one-time grant of $500 to be used toward their existing PECO natural gas account. The newly created program will aid 900 local companies as they continue to attempt to recover from the impacts of the ongoing health crisis. The program will award $450,000 as grants for small business customers in need, on a first-come, first-considered basis. Eligible applicants can apply now at www.peco.com/gasgrant.