Michigan Public Service Commission predicts low natural gas costs despite higher demand, while competing sources shrink

Despite a frigid kickoff to the winter season and likely increased demand for natural gas, the Michigan Public Service Commission’s (MPSC) annual Winter Energy Appraisal, released this week, predicts prices will hold steady.

The MPSC released the estimation since the rest of the season is expected to provide more normal weather patterns and a general slowing of the industrial sector. The effects of this will also be felt among propane, gasoline, distillates, and electricity, where demand should fall. How this will affect the others’ pricing, however, varies by product. Electricity, for example, can see great variety merely utility to utility, with the MPSC noting that DTE Electric Co.’s prices were 10.4 percent higher this year and Consumer Energy’s 1.2 percent higher.

For natural gas, however, production is declining as demand projections chart 2.7 percent higher in all sectors. The cause of the former is likely that Michigan’s wells are reaching the end of their economic lifespan. Inventories remain stable, but as for cost, customers could see the fuel cost portion of natural gas bills down by as much as 8 percent, due to the past year’s lower gas prices holding steady. More than 75 percent of Michigan’s homeowners use natural gas for heat.

When it comes to electricity, sales are expected to fall across all sectors, though the use of electricity for home heating had been expanding. The total hit will likely be 3 percent, with residential seeing the slightest dip at 2.6 percent, compared to a commercial drop of 3.3 percent and an industrial drop of 3.2 percent. As with natural gas, the supply is steady. Its prices, on the other hand, are trickier to weigh into due to the sheer variety. While the state’s largest utilities — noted above — saw prices rise, some, like the Marquette Board of Light and Power, actually experienced a 12.3 percent drop in pricing.

The report found that areas of the central and western Upper Peninsula continue to pay the state’s higher rates for electricity.