Lower natural gas prices mean CPS Energy ratepayers are likely going to see summertime bills that are less expensive than last year’s, despite what is shaping up to be another brutal season, utility officials say.
Last year, as residents endured San Antonio’s hottest summer on record, many residents were jarred to find their energy bills were significantly higher. This was a result of A/C systems using more energy to keep homes cool in the intense heat, and also due to the increased cost of natural gas — which CPS Energy utilizes for its power plants and residents use for their stoves.
This summer, the gas costs are down significantly. According to the U.S. Energy Information Administration‘s Henry Hub Natural Gas Spot Price, natural gas cost an average of $8.14 per one million British thermal units (MMbtu) in May 2022. A year later, the average cost is $2.15 MMbtu. British thermal units are the common unit used to measure heating content and the value of a fuel.
“It’s perspective; if you look to last year, well, your bill is going to feel lower,” said Cory Kuchinsky, CPS Energy’s chief financial officer. “If you’re comparing your bill to, say, April [or] May, though, of course, it’s going to be higher because it’s been hotter.”
CPS Energy customers’ bills were up roughly 30% from the previous year as of July 2022, prompting concerns that the utility’s recent rate increase was to blame. However, the utility said only about 4% of customers’ higher bills could be attributed to the rate change.
Bills were so high the city ended up giving customers of the municipally owned utility a rebate. The rebate, which on average was about $29 for a residential customer, went back onto ratepayers’ bills in the form of a credit.
Fuel adjustment fees
With gas prices lower, it’s too soon to say whether another rebate is a possibility this year. So far, San Antonio has seen 10 days with triple-digit temperatures in 2023 compared to 22 by this time last year.
Natural gas costs are reflected in CPS Energy’s power bills in two ways. A customer who uses natural gas is charged directly for it via a pass-through fee, which is easy to see on the utility’s bill, but CPS Energy also charges ratepayers for its own natural gas use through the more complicated fuel adjustment fee. When the market price of natural gas is high, this charge goes up.
The price of natural gas was up last year when the U.S. saw record demand due to extreme weather conditions. This led to the largest storage withdrawal in four years, sending prices skyrocketing as demand outpaced supply. The Henry Hub natural gas spot price peaked on Aug. 22, 2022, at $9.85 per MMBtu.
The natural gas spot price decreased late in the year due to high production. By November, the amount of natural gas in storage was close to the previous five-year average.
That’s good news for CPS Energy customers, Kuchinsky said.
Conserve and save
With CPS Energy looking to depend more on gas in the near future as it retires coal from its power generation portfolio, customers may have to get used to watching natural gas prices to estimate their monthly bill, just as they watch the weather to decide on an outfit.
With hotter weather likely around to stay, summer energy bills could remain burdensome for San Antonians moving forward. Customers should try to save energy where they can to help keep their bills down, Kuchinsky said.
CPS Energy said customers can budget a little more predictability into their monthly bills if they utilize its Budget Payment Plan. This takes a customer’s bill from the previous year and divides it into 12 roughly equal payments, which the customer pays monthly. This means less seasonal variability in payments.
At the end of the year, the customer pays additional costs incurred if they used more energy than they were billed for, or sees a surplus amount rolled over to the next bill. CPS Energy recalculates the fixed monthly bill each year.
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