Warm winter cools revenues for US utilities

warm winter

We’ve all seen the pictures on TV. Sunbathers on Chicago’s lake front and joggers in summer shorts in New York and cities further north.

The 2011-2012 mild winter has been great for Midwesterners and Northerners tired of the snow-packed white outs and brutal cold that accompany a normal US winter in the northern latitudes. But for the utilities that supply power and gas in those parts to warm homes and businesses, the weather bust has also meant a bust in revenues. According to South Jersey Gas spokesperson Dan Lockwood, his company’s utility sales between November 2011 and February 2012 were 23% lower than normal and 34% lower than the previous year.

South Jersey Gas’ experience has been replicated across much of the country. Michigan-based utility company Consumers Energy reported that its 1.7 million natural gas customers in Michigan were paying about 20% less than for natural gas in January 2012 than it did a year earlier. Even as far south as Tennessee, multi-utility Knoxville Utilities Board reported that residential winter natural gas bills were down 10%, and electric bills, 5%.

While some winter diehards (and kids, of course) missed the snow and the ice, the extra cash available from the “weather rebate” has been good compensation, not to mention the simple joys of an early spring, passable roads, and the lack of airport delays.

However, the weather gods have a way of balancing out one extreme with another. If last year’s brutally hot summer in the South returns and surges northward, the utility companies could all make their money back and more as Northern and Midwestern consumers demand more and more power to stay cool.

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Photo by Andy Melton, used under a Creative Commons license.

 

 

 

 

Stuart Hampton

British editorial veteran Stuart Hampton has been covering oil and gas companies for Hoover's since the Neogene-Quaternary period. Well, actually, since the early 1990s. For the best overview of the oil industry and its history he recommends Daniel Yergin's "The Prize." You can also follow Stuart on Twitter.

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