Warm Winter Kills Energy Sales

Unseasonably warm temperatures have cut into winter propane demand, causing financial strife for some energy companies. (image: novenrique.blogspot.co.nz)

The warmest winter on record since 1950 is good news for homeowners who are paying lower winter heating bills than last year. But the unseasonably mild temperatures are hurting energy companies, many of which are laying off staff because of slow business, walb.com reports.

And in a bitter irony, some propane suppliers are warning they could be forced to hike summer gas prices in order to remain financially viable unless demand picks up.

Albany propane supplier Modern Gas laid off eight employees this month, because of slow business. Modern Gas’ propane tank recharging facility is usually running at full steam in February. But this week it was idle. The company has been in business since 1954, but has never seen a warm winter like this, and now it’s costing jobs.

“Normally we are very busy,” company president Mark Holloway said. “Unfortunately we have had to lay off some personnel due to the warm weather.”

Sales of heaters were almost zero and customers’ propane cylinder refills had dramatically tapered off. “I think they will wait until next year. I think the season, we’ve missed it,” Holloway said.

The company was now looking forward to spring and grilling season to increase propane sales.

Meanwhile, Albany Water Gas and Light officials say they have lost so much revenue from people not running their heaters, a rate increase set for July may have to be brought forward to March. Company officials said while energy customers had enjoyed lower heating bills this winter, lower natural gas and propane revenue had cost the energy dealer about $2 million.

“We were less than budget about $750,000 in December, and I expect January to be worse than that,” said John Vansant, Water Gas and Light Commission director of fiscal affairs.

With gas sales and electricity demand well down in December and January on previous years, the company was looking at implementing at 10 percent rate increase sooner than expected, which would mean hitting customers with higher air conditioning costs over summer.

“We were hoping to not do it until July, at the beginning of our fiscal year. But due to this warm weather that we’ve had. This very, very mild winter, it looks like we are going to have to move it up,” Vansant said.

And it’s not just smaller, independent gas suppliers that are feeling the pinch due to warmer than normal conditions. Propane heavyweights AmeriGas Propane Inc and Suburban Propane Partners are among major propane retailers reporting lower first quarter earnings results this fiscal year. Both companies have blamed the touch operating environment on the mild temperatures cutting into winter heating demand.