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Changing Energy Markets Will Impact Virginia

From the Desk of the Executive Director

The news regarding the energy sector has moved from Texas blackouts, to power outages in Louisiana, to surging natural gas and power prices in the UK and Europe, to blackouts in China, and now to warnings about a likely expensive winter heating season caused by spiking natural gas prices. Alarming in many ways – and unfortunately, I don’t think Virginia will be immune to all of these challenges facing or faced by others. 

In the near term, most interesting to me will be the likely steep rise in natural gas prices and how it will impact households’ winter heating bills. Many in VA directly heat their homes with natural gas and they will likely see this expense go up, but those who use electricity should see less of an increase, because the power plants supplying the grid also rely on other “fuels” (nuclear, coal, hydro, etc…). Fuel oil prices also seem to be trending upward, which won’t deliver any relief for those who rely on it for winter heating.

LEAP provides solutions to all of this, including weatherization and other energy-saving measures that can help residents hedge against the increasing costs. Seeing the trend in increasing energy prices – not only natural gas – is one reason why LEAP is expanding our insulation crews and adding related equipment in order to meet the increased demand.

However, over the medium-long term, many Virginia residents are going to evaluate the fuel they use for space heating (and water heating) in light of the medium-long term prognosis of natural gas price increases. From a policy and utility energy-efficiency program perspective, it will be essential to assist low-income households in electrifying their homes to reduce direct exposure to fossil fuel price increases like natural gas and keep energy burdens at a sustainable level. 

While fossil fuel prices are highly likely to increase in the state of Virginia, electricity prices for Dominion Energy customers will also likely be increasing. Dominion will likely increase prices for a number of years, at around 3% annually, as it builds out more renewable energy and retires fossil-fuel-based generation. In addition to the weatherization solution to this problem, LEAP is also creating a Community Solar business, which would be able to offer below-market rates for electricity to low-income households. Unfortunately, that won’t be available until early 2023, but is another example of the medium-long term planning we are doing to offer our low-income clients a solution to higher electricity rates.

So, while I don’t think Virginia will suffer the extremes of the energy market volatility nor blackouts, it will be impacted, and we need to offer services to mitigate likely increases in energy prices. We at LEAP will be keeping an eye on these markets as we implement those services in order to best serve our clients not only now, but in the future.

Cheers,
Chris Meyer, Executive Director of LEAP

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