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Staff Photo by Matt Hamilton / Lead service technician Tommy Evans with Carter Heating and Air works during a service call on Friday, November 5, 2021.

Some Chattanooga area homeowners could see a steep increase in heating bills this winter as natural gas and other fossil fuel prices jump.

Chattanooga Gas, which supplies natural gas to about 69,000 customers in Hamilton and Bradley counties, projects its typical residential customer will pay about $27 more a month during the upcoming winter season than a year ago.

Company spokeswoman Robin Gray said gas supply costs are up 48%, even with the gas utility's purchasing natural gas supplies across a diverse mix of production areas and trading hubs.

A hike that steep won't affect the whole region. In fact, about 70% of Chattanooga households heat with electric furnaces and heat pumps that are less susceptible to volatile fuel prices.

The Tennessee Valley Authority, which delivers electricity at prices below the U.S. average, expects higher fossil fuel prices will boost its fuel cost adjustment this winter and likely keep rates 5% to 8% higher than last winter.

With a more diverse generation portfolio than most power utilities, TVA should be able to mitigate most of the impact of the soaring natural gas and coal prices over the past year.

"We have a really diverse portfolio of power generation which we're able to adjust to get the cheapest source of power available," said Cass Larson, vice president of pricing and contracts at TVA. "We got used to cheap natural gas and coal, but those prices are up as much as four-fold today, compared to what they were a year ago."

Cutbacks in global production amid rising demand for energy and supply interruptions around the world largely have ended a nearly decade-long slump in natural gas prices.

"We're at a unique point in time now where just all energy prices are going up," Francisco Blanch, head of global commodities, equity derivatives and cross-asset quantitative investment strategies at Bank of America Merrill Lynch, told CNBC last month.

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Higher natural gas prices mean bigger winter bills for some in Chattanooga area

While natural gas prices are rising this winter, future trading and projections suggest natural gas prices should ease by the spring.

"There is an increased demand for natural gas as the economy continues to recover from the pandemic, and that is affecting supply and ultimately the cost," Gray said. "This is expected to be a short-term spike. In the long term, natural gas prices are projected to remain low."

The gas utility price increases in Chattanooga still are likely to be below many other gas suppliers, and Chattanooga Gas contends its fuel is the best long-term value for many homeowners and industries.

"Even with a rise in natural gas prices, natural gas is still among the lowest-priced fuel choices for home and commercial heating, cooking and manufacturing when compared to national pricing for propane, fuel oil and electricity," Gray said.

The United States is not feeling the pinch as much as most of the world. Nonetheless, the U.S. Energy Information Administration projects that households will see their heating bills jump as much as 54% compared to last winter.

Nearly half the homes in the U.S. use natural gas for heat, and they could pay an average $746 this winter, 30% more than a year ago, according to government projections. Those in the Midwest could get particularly pinched, with bills up an estimated 49%, and this could be the most expensive winter for natural-gas heated homes since 2008-2009.

Where to get more help

* EPB offers free home energy checkups by calling (423) 648-1372">(423) 648-1372. An EPB Energy Pro will complete a thorough home inspection and offer advice on how you can save. Or, complete a DIY home energy evaluation at epb.com/energy/save-energy-and-money/home-energy-dashboard/

* Chattanooga Gas Co. offers energy savings advice at Customers are encouraged to go to chattanoogagas.com/energyassistance.

* For low-income residents, energy assistance is available through the Low Income Home Energy Assistance Program (LIHEAP) through Chattanooga’s Office of Family Empowerment at 501 West 12th Street or call 423-643-6434.

Source: Tennessee Valley Authority, EPB, Southern Gas Co., City of Chattanooga

Chattanooga Gas Co. and the local power companies that distribute TVA electricity such as EPB in Chattanooga pass along the changes in their fuel expenses in monthly fuel cost adjustments on utility bills.

TVA has not raised its base rate since 2015 and is projecting another decade of stable base electric rates outside of fuel cost changes.

TVA President Jeff Lyash said even the fuel cost adjustments at TVA are less volatile than most utilities. TVA gets more than 40% of its power from its seven nuclear reactors, and with the abundant rains this year more than 10% of its power demand will be supplied by its 29 power-generating dams.

Combined with some solar, wind and other renewable generation by TVA and through purchased power agreements, only about 40% of TVA's power is generated by the burning of fossil fuels.

"We've already mitigated much of the risk of higher [cost] fuels by burning less gas and coal and we also have hedged a substantial amount of our natural gas," Lyash said. "We think we'll remain in a very competitive price position."

Average electricity consumption for Tennessee households is 33% higher than the national average and among the highest in the nation, but spending for electricity is closer to average due to relatively low electricity prices.

TVA also has ended construction of costly new power plants, which tend to lead to rate increases once the units begin generating power and are brought into the rate base for calculating the price of power.

The Georgia Public Service Commission on Tuesday approved a $224 million rate increase to pay for $2.1 billion in construction costs on one of the new reactors at its Plant Vogtle near Waynesboro, Georgia. That will mean a 3% rate increase for residential customers, or $3.78 a month on a typical bill of $122.73. It will take effect after Unit 3 enters commercial operation.

Contact Dave Flessner at dflessner@timesfreepress.com or at 423-757-6340.

What you can do to save energy

* Set your home’s thermostat a few degrees lower on cold days (or higher on hot days). For each one-degree change, your family can save up to 5% on your home’s heating and cooling costs.

* Set your thermostat 5 degrees higher when you’re away. A programmable thermostat can save up to $150 a year.

* Replace HVAC filters every month, don’t block registers and, seal ductwork to save 20% or more on energy use.

* Turn off lights and all electronics (like computers, televisions, stereos, and video-games) when you leave a room.

* Use the microwave instead of the oven for cooking your meals.

* Use machines like washers, dryers and dishwashers after 8 p.m.

* Open your blinds or curtains on sunny winter days to let the sunshine into your home. Install thermo-pane windows, open curtains and blinds for warmth and, shade with awnings and trees.

* Save hot water by taking short showers instead of baths.

* Turn off warm water while you brush your teeth.

* Keep attic insulation at R-30, seal gaps around doors & windows and, close fireplaces when not in use.

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