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Report Predicts MI Winter Electricity And Natural Gas Demand

Michigan Business NewsLansing, MI - The Michigan Public Service Commission’s Winter Energy Appraisal for 2023-2024 projects demand for electricity will decline slightly while demand for natural gas will increase, mainly because of increased use of the fuel in electricity generation.

The annual report released Wednesday, November 8, 2023 projects electricity demand will decline 2.7% overall, with residential demand declining 5.7% and commercial demand falling 2.5%, while industrial demand increases 0.9%. Consumption of natural gas is projected to increase 7.6%, due to increased use of gas in electrical generation, outweighing expected declines in the residential (-5.4%), commercial (-4.3%) and industrial (-1.6%) sectors.

While household electric use is expected to decline, the U.S. Energy Information Administration (EIA) forecasts that average electricity prices in the east north central part of the country, which includes Michigan, will increase to 16.09 cents per kilowatt hour (kWh), up 3.9% from 2022. For natural gas, the average commodity price for natural gas for the upcoming home heating season is expected to be $3.53 per thousand cubic feet (Mcf), down from $5.80 per Mcf last winter.

For families struggling with home energy costs, help is available. Information about financial assistance and other resources is available at michigan.gov/mpsc/gethelp, a one-stop webpage that has information and links to state and utility company programs that offer energy bill assistance to income-qualified households, including State Emergency Relief, the Michigan Energy Assistance Program, and the annual Home Heating Credit.

The web page includes links to contact info for all of the natural gas and electric utilities whose rates are regulated by the MPSC; many utilities offer payment programs, including those that help spread seasonal higher costs year round. The page also has information on home weatherization and other ways to help lower energy use.

Anyone needing help may reach out to their utility or contact Michigan 211 by calling 211 or going to www.mi211.org. Michigan 211 is a free, confidential service that connects Michiganders with a broad range of assistance programs and services and other resources, including help with food, housing, transportation and home energy bills.

Other significant findings from the MPSC’s energy outlook include:

  • Residential propane prices as of October 2023 averaged $2.09 per gallon, down 16.6% from the year before.
  • 2 heating oil started the season at $3.88 per gallon, down 12% from last year.
  • Average Midwest gasoline prices are expected to average $3.47 per gallon in 2023 and $3.56 in 2024, down from $3.89 per gallon a year ago.

Here is the outlook by category of fuel:

NATURAL GAS

Demand: Total natural gas sales are expected to rise 7.6% in 2023 to 1.06 trillion cubic feet (Tcf), assuming normal winter weather. Power generation, expected to increase 33% in 2022, is expected to drive the growth in sales, overriding declines in the commercial, industrial and residential sectors. Natural gas fuels about 77% of Michigan’s home heating.

Supply: Michigan gas storage levels — the state has 10% of the nation’s available underground storage capacity — are expected to be 544 billion cubic feet (Bcf) to end 2023, an 18% increase year over year. U.S. inventories were 3,700 Bcf as of Oct. 20, 9.2% higher than in 2022.

Cost: The projected weighted average commodity price for residential customers of regulated Michigan utilities this season is $3.50 per Mcf, compared to last year’s actual average of $5.80/Mcf.

PROPANE

Demand: Propane is used for home heating by 8% of Michigan households, and Michigan uses more propone for residential heating than any other state. Current federal weather forecasts call for above normal temperatures this winter heating season, and weather is the chief determinant of demand.

Supply: U.S. propane production remains strong. U.S. inventories are at 102 million barrels, 19% higher year over year. Midwest inventories were at 27.7 million barrels, 6% above the five-year average.

Price: For the week of October 16, 2023, the average residential propane price in Michigan was around $2.10 per gallon. The EIA reported that wholesale propane prices began the season at 87 cents per gallon, 24 cents lower than in 2022.

ELECTRICITY

Demand: Michigan’s total electric sales for 2023 are projected to decrease 2.7% to 97l7 terawatt-hours (TWh) compared to 100.37 TWh in 2022. Sales are expected to decline in the residential and commercial sectors while increasing in the industrial sector.

Supply: No supply shortages are expected by the independent system operators serving the state.

Prices:  The EIA forecasts residential retail electricity prices in the east north central U.S. to average 16.09 cents per kWh for 2023, up 3.9% from the prior year. In Michigan, prices vary by utility.

MOTOR GASOLINE

Demand: Sales in Michigan are expected to decline 1.2% in 2023, following a 0.5% decline in 2022.

Supply: As of November 4, the Midwest held 44.3 million barrels of gasoline inventories, 1.2 million barrels less than a year ago. Nationally, gasoline inventories are 6.6% lower than last year and near the middle of the five-year range for this time of year.

Prices: A gallon of regular unleaded gasoline in Michigan on Oct. 23 averaged $3.39 compared to $4.05 the year before. Midwest retail regular grade gasoline prices are expected to average $3.47 per gallon for 2023 and $3.56 per gallon in 2024.

DISTILLATE FUELS

Demand: Use of distillates for home heating continues to decline in Michigan, currently estimated at 35,680 homes compared to nearly 77,000 in 2010.

Supply: Midwest distillate stocks as of Oct. 13 were at 29.3 million barrels, 3.8 million barrels higher year over year. National inventories were at 114 million barrels, 8 million barrels higher than in 2022.

Prices: On-highway diesel fuel is expected to average $4.29 per gallon for 2023, 72 cents per gallon lower than in 2022, and remain relatively steady in 2024. AAA Michigan found the average diesel price in Michigan at $4.31 per gallon on Oct. 23, $1.15 lower than the year before. The average cost of heating oil was $3.74 per gallon as of Oct. 23, $1.24 per gallon lower than the same time last year.

Read the full Michigan Winter Energy Appraisal.

For information about the MPSC, visit www.michigan.gov/mpsc, sign up for its monthly newsletter or other listservs.

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