Electricity users are going to have to dig deeper into their pocketbooks next year because historically low natural gas prices are starting to climb, federal analysts say.
The Energy Information Administration is projecting an average 22 percent jump in the price of natural gas delivered to generators in 2013.
That is a key component of an expected 1.5 percent boost in the cost of residential electricity, the agency said in its Short Term Energy Outlook, issued Nov. 6.
The average residential price next year will be about 11.98 cents per kilowatt-hour, EIA said, though that masks variances in different parts of the country.
According to the agency, record-high natural gas inventories are expected to decline, leading to tighter demand and higher prices as the heating season approaches.
Spot market prices for natural gas will average about $3.49 per million Btu in 2013, up from $2.77 per million Btu in 2012.
Meanwhile, the average cost of coal is likely to increase by only 1 percent.
That means coal will reverse its diminishing role in U.S. electricity generation, EIA said. Currently, coal accounts for about 37 percent of electricity generation, with natural gas a close second at 31 percent.
“The projected higher price of natural gas relative to coal contributes to a decline in the share of total generation fueled by natural gas [to] 27.2 percent next year and an increase in the coal share to 40.1 percent,” the agency said.
EIA added that it is monitoring the effects of Hurricane Sandy on retail sales and prices in affected states. Sandy knocked out power to 8.5 million customers and might have depressed electricity sales in the mid-Atlantic by 2 to 3 percent, compared with normal use.
