Analysts predict lower heating bills this winter

Officials with Minnesota's energy assistance program say they could see a record number of people seeking help with their home heating bills this winter, but the good news is that economists predict heating your home this winter will be a little bit easier on the pocketbook.

Federal funding for low-income program arrived in the state this week.

Energy analysts say lower fuel costs across the board -- combined with a projected mild winter -- will likely cut average heating costs in the U.S. by 8 percent compared to last year.

That projection comes from the federal Energy Information Administration's annual winter outlook report. Agency spokesman Jonathan Cogan said the lower prices are the result of lower demand due to the weak economy.

"The biggest change is for people heating with natural gas," Cogan said. "The good news is that they'll be paying almost 15 percent less than they were last winter. That's good news in a situation where the economy is still struggling to recover."

The price drop is a big change for the 70 percent of Minnesota households that heat with natural gas. Last year, the price was 17 percent higher than the previous year, meaning the price of natural gas is nearly back to where it was in 2007.

Prices of other fuels are down, too. Analysts project a 2 percent drop in both electricity and heating oil. The cost of heating with propane is expected to be down 14 percent.

The relief comes at a critical time for Minnesotans weary of the poor economy. Patrick Boland, a spokesman for Xcel Energy in Minneapolis, said Xcel expects to see more people struggling to pay their bills, especially those who've lost jobs or saw reduced work hours.

"The economic situation in some folk's households have been just turned upside down," Boland said. "We are talking to customers that really have never needed to call us or contact us before about their bill."

Boland said many customers are calling because of Minnesota's cold weather rule, which went into effect a few weeks ago. The rule protects energy customers from getting disconnected, as long as they contact their provider and commit to a payment plan.

There are signs this could be another record year for people applying for fuel assistance. Linda Lien directs the program for Beltrami and Cass counties. Lien said applicant numbers last year were up 19 percent, and already this fall the numbers are climbing.

"Our applications are up three to four percent so far this year compared to last," Lien said. "People are coming in that have disconnects and need fuel for the fuel tank. We are getting some households that are without a job, unemployed."

The increase is more dramatic statewide.

John Harvanko, director of Minnesota's energy assistance program, said so far 52,000 households have asked for assistance. That's more than an 8 percent increase over last year at this time.

Harvanko said Minnesota will likely match or surpass last year's heating assistance numbers, but said the impact could be minimized if predictions for lower fuel costs and milder winter temperatures hold true.

He said another factor is that more homes are becoming energy efficient. Harvanko said eventually that will reduce the need for energy assistance.

"I don't anticipate a big impact this heating season," Harvanko said. "But as we move forward into the future, that will have a dramatic impact on households as their homes become much more energy efficient."

Minnesota saw a tenfold increase in funding for weatherization projects through the federal stimulus plan.

The wildcard for this winter heating season could be the weather. If Minnesota or other parts of the country experience unexpected and prolonged cold snaps, it could drive up the price of home heating.

The federal Energy Information Administration comes out with an updated forecast in a few weeks.

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