Why was your utility bill so high this past winter? Blame the drought — and California. | VailDaily.com

Why was your utility bill so high this past winter? Blame the drought — and California.

As the drought cut California’s hydropower production, the utilities in state scrambled to buy natural gas, driving up costs across the West

Mark Jaffe
The Colorado Sun
Pedestrians walk across Oroville Dam at Lake Oroville State Recreation Area on Aug. 22, 2021. Two years of severe drought drained the reservoir so low that its hydropower plant was shut down for five months. California utilities that have hydrogeneration were forced to buy much more natural gas on the open market in 2022, driving up prices across the West.
Ethan Swope/AP

One explanation for this past winter’s soaring utility bills was the disruption in global natural gas supplies caused by the war in Ukraine, but it turns out the source of many Colorado households’ woes was closer to home: California.

Drought cut California hydropower production to half of normal levels in 2022, and to fill the gap the state’s utilities went on a natural gas buying spree that drove up the cost of delivered gas to Colorado utilities by almost 100% over the course of the year.

“California bid up natural gas in December and January in basins Xcel buys gas in,” said John Harpole, president of Mercator Energy, a Littleton-based gas brokerage firm. “As a result of California, Colorado ratepayers paid more for natural gas.”

The California scramble pushed up prices across the West, with the cost of natural gas delivered to Colorado utilities, the so-called Citygate rate, rising to $9.83 for a thousand cubic feet in January 2023 from $4.97 in December 2021, according to the U.S. Energy Information Administration.

The drought-related gas prices didn’t only affect home heating bills, but electricity costs as well, with the EIA estimating it could have added 5% to prices in Western electricity markets.

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The California price shock is both a cautionary tale and one that is likely to be repeated as natural gas markets become more volatile and other forces from climate change to the need to backup growing renewable electricity generation play a role in the demand for gas.

Read more via The Colorado Sun.

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