Jul 15 - The Hartford Courant, Connecticut
When it comes to winter heating, people who use electricity have traditionally burned the largest holes in their pockets.
It's possible. Retail fuel oil prices in Connecticut are nearly double what they were this time last year, averaging $4.73 a gallon in the Hartford area this month and even more statewide, according to a survey conducted by the state's Office of Policy and Management.
Electric heat, which is used by about 10 percent of Connecticut households, is expected to cost about 12 percent more this winter than last.
Federal energy forecasters caution against comparing electric heat with fuel oil costs because they're measured in different units -- gallons of heating oil and kilowatt-hours of electricity.
But at The Courant's request, a state office that monitors energy prices broke down the cost of electric heat and fuel oil by BTUs, a measurement of the heat created by burning any material.
The numbers reveal that the cost gap between electric heat and fuel oil is narrowing and is now as little as $2 per million BTUs of heat produced.
The diminishing gap has led some to believe that Connecticut is close to the point when the cost of heating oil, used by 70 percent of state households, will catch up to notoriously high electricity rates.
"It could very well be that we cross that magic number," said Ray Wilson of OPM's Energy Management Unit. "I would hate, from an energy policy standpoint, to be promoting electric heat, but it does highlight the situation."
The energy unit estimated that the electricity needed to produce heat in a typical baseboard heating system currently costs $54.81 per million BTUs.
By comparison, heating oil for a furnace that is 75 percent efficient now costs $45.76 per million BTUs. An older furnace that is 65 percent efficient would cost $52.80 per million BTUs.
Natural gas heat, used by 20 percent of households in the state, turned out to be the best deal at $22.47 per million BTUs for a furnace that is 75 percent efficient.
Environment Northeast, an advocacy and research group with an office in Hartford, has estimated that using a 30-year-old oil furnace became more expensive than using an electric heating system when the price of heating oil passed $4.55 a gallon.
When fuel oil reaches $5.90 a gallon, even more-efficient oil systems on the market today will become costlier than electric heat, the group said.
The projections surprised even industry experts.
"Electricity is way, way more expensive," said Frank Gallagher, a spokesman for the Independent Connecticut Petroleum Association. Those who believe otherwise, he said, "are sadly mistaken." Heating oil would have to cost at least $7.44 a gallon before electric heat becomes less expensive, according to the association's calculations.
Beryl Lyons, spokeswoman for the state Department of Public Utility Control, which regulates electricity distribution, initially rejected the idea that electric heat could cost less than heating oil.
"There's no way," said Lyons, who uses electricity to heat her home.
But after hearing the figures calculated by the state's energy unit, Lyons said, "Wow! They are getting close."
The average heating oil customer in the Northeast is expected to pay $2,915 this winter, 40 percent more than last, according to the federal Energy Information Administration. The average Northeastern household that uses electric heat is expected to see winter heating bills total $1,556, up from $1,395 last year, or 12 percent. The average for electric heat is lower because electricity costs are lower in some states, and because structures heated by electricity tend to be smaller and better insulated.
But energy forecasters warned that even if the cost of heating oil outpaces electric heat this winter, homeowners should think twice before ripping out their oil furnaces and installing a different system.
"It's entirely possible that this swing may occur this year," said Arthur Wright, a professor emeritus of economics at the University of Connecticut who studies the electricity industry. "But what are you going to do about it? You don't want to overreact. And I think most people won't."
Jeffrey Beckham, an OPM spokesman, described heating oil's catch-up to electric heat as a "temporary snapshot of a volatile market across the board."
"Folks shouldn't be making some kind of a switch from whatever they're doing to something else," he said. "All prices in the fuel sector sort of rise and fall in concert. This is a temporary phenomenon."
Instead, energy experts say that consumers should focus on using less energy. Environmental groups say record-high heating oil prices only highlight the need for more energy-efficiency programs focused on oil.
"Heating a home with an old, inefficient boiler is now as costly as using notoriously expensive electric resistance heat," said Jamie Howland, a policy analyst for Environment Northeast. "It is now more important than ever that [heating oil customers] have access to comprehensive, whole-building efficiency programs."
A fuel oil conservation board created by the state legislature last year is developing a plan to offer conservation and energy efficiency programs for residents and businesses that use fuel oil. The programs will be funded through a tax on petroleum products.
Connecticut Light & Power and United Illuminating already offer such programs to their electricity customers, paid for through charges on monthly bills.
For more immediate relief, Gov. M. Jodi Rell and other New England governors are pressing Congress for more federal funding to help low-income residents pay winter heating costs. Federal money is currently set aside in the Low Income Home Energy Assistance Program, known as LIHEAP. The program helped almost 98,000 families in Connecticut last winter.
"Never before in modern history," Rell said in a statement last week, "has New England faced the prospect of so many residents being unable to heat their homes."
Contact Lynn Doan at ldoan@courant.com.
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