Natural gas customers warned that heating bills in Iowa could nearly double this winter

As temperatures begin to drop, MidAmerican Energy, Iowa's largest power provider, is warning thousands of residential natural gas customers their winter heating bills could jump 46% to 96% over last year's due to rising costs.

Natural gas prices have more than doubled since this time last year because of reduced production and inventories and global demand, a news release from the Des Moines-based utility said Tuesday.

The news affects MidAmerican Energy's 602,000 natural gas customers in Iowa. Geoff Greenwood, MidAmerican's spokesman, said it doesn't expect an increase in heating bills this winter for its 704,000 electric customers.

The winter heating season typically runs from November through March.

'People should brace themselves'

"People should brace themselves," said Stewart Glickman, energy equity analyst at CFRA Research, based in New York.

Glickman said all types of heating fuels, including propane, will likely climb, although not at the pace of natural gas.

"On a percentage basis increase, natural gas is probably the worst case," he said.

The COVID-19 pandemic probably had a role in the natural gas price increase, Glickman said. Companies stored less natural gas after the public health emergency shut down much of the country last year.

Since then, though, the economy has picked up, both in the U.S. and globally, pushing energy prices higher, and the costs will trickle throughout the economy, from the gasoline pump to the grocery store, he said. 

"Those costs will get passed onto the customers," he said.

Peggi Allenback, a vice president of market operations at MidAmerican, said gas bills would increase despite the company's efforts to make advance purchases when costs are lower.

Morgan Hawk, an Alliant Energy spokesman, said the utility also is making advanced natural gas purchases before winter drives prices higher.

"We are closely following changes in global supply and demand that are anticipated to increase natural gas costs for customers this winter as they have in the past," Morgan in wrote in an email. Alliant's subsidiary, Cedar Rapids-based Interstate Power & Light, provides electricity in Iowa.

Hawk said it's difficult to "anticipate the exact impact of these market shifts."

Customers' heating bills will vary, depending how cold it gets, how much energy they use and market price fluctuations, said Allenback.

"Based on the market prices for natural gas over the last month, residential customers in MidAmerican’s service area can likely expect their total bills to increase by 46-96%," the company's news release said.

Alliant and MidAmerican, urged consumers to consider measures to decrease gas consumption and increase their homes' energy efficiency, including setting their thermostats lower, having their furnace serviced and stopping air leaks around doors and windows.

Allenback said the company doesn't anticipate any shortages of natural gas.

How will higher natural gas prices be shown on bills? 

MidAmerican, part of Warren Buffett's Berkshire Hathaway conglomerate, said the higher market prices will be reflected in the gas supply charge on customers' bills. Market price fluctuations do not affect rates, which include fixed administrative costs as well as costs associated with maintaining infrastructure and ensuring safety.

At the same time natural gas prices are rising, MidAmerican customers also will be paying off the costs tied to the polar vortex in February. That extended cold snap in Iowa and elsewhere in the country, including Texas, drove natural gas prices to historic highs.

MidAmerican, Alliant and other utilities worked with state regulators to spread those costs over a longer period than usual to reduce the financial impact on customers. In Iowa, MidAmerican is spreading the costs through April 2022.

Heating bill assistance, budget billing programs

To manage costs, customers can ask MidAmerican for budget billing, a free program designed to provide stable, year-round bills, eliminating the volatility that comes with seasonal costs. 

Iowans who qualify also can ask for federal assistance to pay their heating bills or weatherize their homes through the state-administered Low-Income Home Energy Assistance Program, called LIHEAP. 

In addition, MidAmerican provides heating bill assistance and home weatherization through its "I Care" program. It adds 25 cents to every dollar customers donate, and uses the money their communities.

Iowans can apply for LIHEAP, I Care and other assistance programs through community action agencies at humanrights.iowa.gov/dcaa/where-apply.

MidAmerican also offers rebates and other programs to customers looking to make their homes more energy efficient, including a free online assessment tool called HomeCheck Online.

For budget billing information, call MidAmerican at (888) 427-5632.

Donnelle Eller covers agriculture, the environment and energy for the Register. Reach her at deller@registermedia.com or 515-284-8457.