In the fall of 2021, MidAmerican began alerting customers to prepare for a 50%-100% increase in their bills over the course of the 2021-2022 heating season. Now that the heating season is over, prices remain unexpectedly high – but relief is on the way thanks to warmer weather.
When will my bill go down?
The good news is that as the weather gets warmer, you will likely use less natural gas and the gas supply portion of your bill will go down. We can’t predict how natural gas prices on the open market will be later today, tomorrow, or in a few months – so for now the best way to control your bill is to control your energy use and explore programs to make bills more manageable, like Budget Billing and through energy efficiency programs.
However, as the weather warms, many of us will see our electric bills increase as we use our air conditioning units more. Often, we use more electricity when running air conditioning, fans and other comfort systems during warmer weather.
Why is this happening to my gas bill?
Unfortunately, there is no simple answer. Multiple factors are affecting supply, demand and market conditions, causing both historically high prices and price fluctuations for natural gas.
To ensure you are served without interruption, we must continually purchase natural gas from the market at the going rate. You pay for the cost of the gas you use through the gas supply charge on your bill. That charge is driven by market prices and it’s a direct pass-through cost without a markup.
Here are some contributing elements affecting natural gas prices:
- COVID-19 pandemic: In 2020, many businesses scaled back or closed, resulting in lower usage. That reduced natural gas production and storage as demand and prices dropped to historic lows. Natural gas production has since ramped up from pandemic lows, but production has struggled to match demand increases.
- Supply and demand: Natural gas market prices have been in flux as the pandemic has eased. Factors that affect prices include weather patterns and storms, production and storage levels, record global exports of liquified natural gas (LNG), as well as other economic and geopolitical pressures.
- Russia/Ukraine conflict: Russia’s invasion of Ukraine did not significantly affect the natural gas market prices during this past winter heating season. However, that’s changing. Fear and speculation over gas supply concerns and events in Europe have increased global and U.S. natural gas market volatility.
But even more top of mind: How can I manage my bills?
- Enroll in Budget Billing – Budget Billing allows you to pay a predetermined amount on your monthly bill based on past usage. You will still pay for actual electricity and natural gas usage but not necessarily in the month of consumption. Log in to your My Account to get started or call us at 888-427-5632.
- Take part in our energy efficiency programs and rebates – Take our HomeCheck Online assessment to evaluate your home energy use, get tips for saving energy and money, plus Iowa and Illinois residents can receive a free energy efficiency kit to put some of those tips into action. And, if it’s time to upgrade your thermostat or furnace, we have rebates available for Iowa, Illinois and Nebraska customers.
- Apply for LIHEAP – This assistance is available to income-qualifying customers administered through local community action agencies. Find state-based information on the Assistance page.
- Get assistance from, and donate to, I CARE – I CARE is an assistance program funded primarily by customer donations with a 25% match from MidAmerican. I CARE assists customers who are unemployed, living on fixed or low incomes, or experiencing a family crisis by helping them pay their heating bills or making their homes more energy efficient. All donations go directly to the community action agency in the area where the contribution originated. Customers can make a one-time or recurring monthly donation.
What part of my bill does high natural gas prices impact?
The gas supply charge
- The first portion of your gas bill is for the cost of the gas itself, called the gas supply charge. The price for each unit of gas you use, called a therm, is driven by market prices. This is the portion of your bill that changes based on the price of natural gas.
- The second portion of your natural gas bill is the gas delivery charge. Customers pay the delivery charge on each unit of natural gas that they receive from MidAmerican. It includes the cost to maintain a safe gas delivery infrastructure and administrative expenses. This cost is approved by state regulators and has not changed for Iowa, Illinois or Nebraska customers. However, we recently requested approval for a rate increase for South Dakota customers.
The amount of natural gas you use also has an impact on your bill and can be controlled by taking steps to keep your home or business energy efficient.
Does MidAmerican make a higher profit when natural gas prices are high?
No. We do not profit from gas prices. We are not involved in natural gas production – we purchase natural gas on behalf of our customers.
All of the costs to purchase and transport the natural gas that we supply to our customers are passed through dollar-for-dollar on customers' bills without any markup.
How does MidAmerican minimize customer impacts from changes in natural gas prices?
We take proactive measures to help try to protect customers from extreme price spikes and seasonal price run-ups, which can occur during periods of high demand for natural gas, such as what occurred in February 2021 with the polar vortex.
We contract for interstate pipeline storage capacity and operate our own LNG storage facilities. We fill this storage prior to the heating season which can help stabilize the price. We also secure the price on up to one-third of the natural gas we expect to purchase during the heating season for delivery to our customers.
But, it’s important to understand that:
- Natural gas prices vary by month, so we typically must secure a unique price for each individual month of the heating season.
- More natural gas purchases will be necessary to meet customer demand through the rest of the heating season; natural gas purchases that we have not secured in advance can fluctuate significantly on a monthly and daily basis over the course of the season.
- Winter weather can also greatly impact market prices.
What about my electric bill?
In Iowa, the current rise in natural gas prices won’t affect your electric bill this winter. We set the customer cost of electric generation fuel annually and it does not change with commodity prices as natural gas does. That electric fuel cost is reflected on your bill in the energy adjustment clause (EAC) line item.
In South Dakota, any impact to electric bills would be minimal because MidAmerican’s generation portfolio consists of a diverse set of resources, and natural gas-fired generation only represents a small portion. Additionally, unlike the composition of customer costs for MidAmerican’s natural gas service, the variable fuel component (Energy Cost Adjustment) of a customer’s electric bill represents a much smaller portion of the total bill.
In Illinois, any impact to electric bills would be minimal because MidAmerican’s generation portfolio consists of a diverse set of resources, and natural gas-fired generation only represents a small portion. The Illinois fuel adjustment charge (FAC) changes on a monthly basis. Higher than usual generation and purchase costs would impact the FAC two months later.