(Bloomberg) -- New Yorkers face a sharp rise in electricity bills this winter as Russia’s war in Ukraine and a rebound in local demand boosts prices of natural gas, according to the state’s power grid operator.
Wholesale electricity prices may be 20% to 30% higher than last winter, the top executive at the state grid operator said at a Monday media briefing. While the New York Independent System Operator doesn’t forecast prices, there is a “very tight correlation” between natural gas and power prices, Chief Executive Officer Richard Dewey said.
New York City natural gas prices for January delivery are more than 60% higher than a year ago as the war limits global supply and post-pandemic demand rebounds. Those costs get passed onto consumers, who use electricity from gas-powered plants.
“If we get very cold for an extended period of time, we anticipate that demand will go up and prices will go up even more,” Dewey said, adding that a mild winter would send prices lower.
Also See: More Americans Than Ever Can’t Afford to Pay Their Electric Bill
The region has enough electricity supplies and sufficient generator fuel inventories for even the most extreme cold scenario this winter, the grid operator said in a Monday statement.
Americans are facing their costliest winter heating bills in years, adding to inflation that is straining consumers’ wallets. New York is even more reliant on natural gas after shutting down the two Indian Point reactors in 2020 and 2021. Further up the East Coast, New England is at risk of gas shortages or even blackouts if extreme cold weather blasts the region. Gas supplies to the Northeast can be tapped out on the most frigid days because of pipeline limits.
Consolidated Edison, which operates the utility serving most of New York City, expects residential power bills to climb by 22% on average this winter and gas heating bills to rise 32%.
Also See: Quarter of Americans Face Risk of Winter Power Emergencies
State power demand is expected to peak at about 23.9 gigawatts this winter, up 2.8% from last year’s high, New York ISO said. In an extreme cold scenario, demand would surpass the winter record set during the 2014 polar vortex. One gigawatt is enough to power up to 1 million homes.
The strain on winter power supplies may increase in the coming years in the push to electrify cars and heat pumps instead of using fossil fuels, according to the grid operator.
Since its summer assessment, about 477 megawatts of fossil fuel generation have permanently shut and 672 megawatts of wind and solar have come online, Aaron Markham, vice president of operations, said in the briefing. The intermittency of renewables means “they are not a one-for-one replacement for the fossil fuels being retired,” he said.
(Updates NYISO comments starting in second paragraph)
©2022 Bloomberg L.P.