Michigan residents face many variables this furnace operating season, both due to the weather and the utility bills they’ll face to heat their homes – but the odds may be in their favor. .
National energy officials said this week that winter heating bills are expected to skyrocket, for some homes by more than 50%. However, experts said Michigan’s natural gas storage capacity, market practices and even untapped reserves position the state better than most, even in anticipation of a La NinÃ£ roller coaster winter.
Conservationists nationwide and in Michigan have said they hope painfully high natural gas prices will become the motivation homeowners need to replace gas furnaces and other appliances with electric versions. This would reduce overall residential fossil fuel use, encourage faster development of renewable energy and cope better with greenhouse gas emissions and climate change, they say.
âWe have to really push a lot of people who use natural gas into electricity, so that might actually do it,â said Jan O’Connell of the Sierra Club Michigan section.
However, natural gas prices in the Great Lakes State may not rise as much as expected elsewhere.
This is largely because Michigan has more natural gas storage capacity than anywhere else in the country, which state officials say allows utilities to physically hedge against domestic prices. It is the state’s unique geological features that allow businesses to store natural gas underground that can be released when demand increases during cold spells.
âMichigan has the most storage in the United States for natural gas. We are therefore uniquely positioned to be immune from any price spikes due to weather conditions or supply shortages, âsaid Nora Quilico, sales forecasting manager for the Michigan Public Service Commission.
âOur two main utilities – which serve 90% of Michigan customers – DTE and Consumers Energy, get more than 50% of their winter needs from storage. “
This means that reserves can absorb the financial shock of high demand when extremely cold weather causes homeowners to increase their thermostats. Michigan utilities have just opened the doors to meet the need, officials said.
Consumers and DTE Energy officials have said they will protect their customers from market-induced price increases by relying, among other measures, on the large reserves held in storage facilities.
âWe buy natural gas in the summer when it’s cheap, store it in our 15 storage fields, and then use it for winter demand during the winter heating season,â said Katie Carey, Director of External Relations at Consumers .
It’s a unique and valuable asset that helps Michigan utilities better prepare for the often extremely cold conditions during the winter months, said Dan Brudzynski, vice president of gas sales and supply. DTE.
He said there are also long-term financial tools to help control natural gas prices. He said the purchasing decisions the company made months ago would benefit its customers this winter.
âWe take a very conservative approach to planning. We want to be able to deliver energy safely and reliably to our customers. Thus, to date, 90% of our expected supply needs have been blocked. Prices were locked in long before the price hike, âhe said. âSo customers should see stable gas costs throughout the winter. “
And Michigan still has one more advantage in natural gas, if the immense storage capacity and guaranteed market prices inked during less volatile economic times would not be enough to stabilize the consumer market.
Production companies could return to the oil and gas fields of northern Lower Michigan, where thousands of wellheads stand ready to extract more fracking hydrocarbon gas. This activity in the Antrim shale peaked in the early 1990s with no new well permits since 2015 amid low natural gas prices.
âFor our members, there aren’t many incentives to drill for natural gas with the low prices,â said Jason Geer, president and CEO of the Michigan Oil and Gas Association, an agency of the industry.
âBut now I think that’s starting to change. “
Some 10% to 15% of the natural gas already delivered to Michigan consumers comes from the state. Geer said that part could increase with rising world market prices.
Learn more about MLive:
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