Pennsylvanians, who live in one of America’s most productive states for natural gas extraction, have seen their utility bills climb despite that ample supply.

Experts say the fault lies in the trio of international energy demand, infrastructure investment and the jump in inflation during and after the covid pandemic.

“Natural gas is one large commodity market and an increasingly global commodity market,” said Brendan Pierpont, director of electricity modeling for nonprofit think tank Energy Innovation. “The fact that Pennsylvania is a big gas producer doesn’t necessarily imply this in this big commodity market that they’ll be the price setter.”

Gas and electric bills have been driven by the Russian invasion of Ukraine and investments in grid resilience along with increases in labor and equipment costs that have hit every industry, part of an inflationary trend that peaked in 2022 and has receded to typical levels since. A majority of U.S. customers get these services from a private company.

September data from the Bureau of Labor Statistics shows a 3.7% hike in electricity costs since the same time last year, and a 2% rise in the price of natural gas service.

Water systems, which tend to be more splintered and, in almost 90% of U.S. cases, municipal-owned, have been comparatively resistant to cost increases, though not necessarily for encouraging reasons, Moody’s Ratings Vice President and Senior Credit Officer Jeffrey Cassella told TribLive.

“Water utility companies are investing in their infrastructure, but to some degree, because the water utility is so fragmented, they don’t have the capital to invest in their infrastructure as much as some of these investor owned utilities,” he said, explaining how less investment equals lower short-term rates.

Inflation for water, sewage and trash collection services — bundled together in the bureau’s Consumer Price Index — hit 4.8% in September. While that exceeds other utilities, the rate of cost hikes for water hit nowhere close to the same highs in recent years.

Like many of the sectors analyzed in recent weeks by TribLive, inflation has cooled in the utility market, but that doesn’t mean substantially cheaper service is on the horizon for most consumers.

Understanding your bill

Utility bills are split into two charges: Commodity costs and a base rate.

Commodity costs refer to the units of resources being supplied, like gallons of water. These prices, particularly for gas and electric utilities, are driven by the global interplay of supply and demand, according to experts.

When Russia invaded Ukraine, for example, Europeans tried to shake their dependency on the aggressor’s natural gas. They turned to American imports, ratcheting up competition for the resource.

Well over 40% of America’s electricity is generated by natural gas, followed by renewables, nuclear and coal.

“Taking more out of the domestic supply is obviously going to impact domestic prices,” Cassella said.

The natural change of the seasons also plays a part in commodity costs. When it’s cold, more gas is needed to heat homes, and when it’s warm, electricity-hungry air conditioners kick on.

The base rate refers to the supplier’s cost of delivering the commodity and maintaining the grid needed to do so, plus profit — about 10%, by recent estimates.

For water utilities, base rates can be inflated by lead line removal, filtering out harmful chemicals and fixing main breaks, among other repairs and upgrades.

Gas and electric utilities deal with many of the same expenses, including downed trees and investments to prepare the grid for hotter, more erratic weather patterns.

The role of clean energy

Despite a tendency in certain circles to point fingers at clean energy for utility inflation, renewables aren’t to blame, according to Pierpont and a host of other energy researchers.

In July, Pierpont released a report in which he concluded residential electric rates have not increased faster than general inflation, especially in states that have been quicker to adopt wind and solar. Rather, he argued, natural gas price volatility, infrastructure investments and extreme weather, like wildfires in California, are the primary drivers of recent increases.

Clean power could help offset these expenses or even reduce utility costs in the long-term, according to Pierpont.

“In general, the trends that we see are that clean energy is already fairly cost effective, fairly cheap in many parts of the country, particularly the parts of the country that have really high quality winds and solar resources,” he said.

Regulation

It’s not just the utility providers who determine what customers pay.

Some in Pennsylvania are regulated by the state’s Public Utility Commission, a five-member board that oversees rates, safety and service adequacy of privately-held utilities. There are exceptions, like the city-owned Pittsburgh Water and Sewage Authority.

Utilities under the commission’s jurisdiction must prove the necessity of any rate increases before a decision is made to approve, deny or suspend the request.

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Municipal-run utilities are accountable to their rate payers, Cassella noted, and public backlash can get “ugly at times,” providing a check on rate hikes for them, too.

One reason utilities invest in their infrastructure so freely, experts said, is because of the country’s general regulatory framework that ensures they’re able to recover these costs.

That can create “gold plating,” as Pierpont put it, where utilities are biased toward big capital projects, like a new substation, instead of minor tweaks, like promoting smart thermostats, that can have similar impacts on their ability to meet service demand.

How to save money

Beyond the standard tips — adjust the thermostat, invest in energy efficient appliances and unplug electronics when not in use — Marx has a few suggestions for trimming utility bills.

“One of the most important things people need to understand is there are programs out there to assist on the bill you get,” she said.

Many utility providers offer customer assistance programs that can reduce bills, pause debt and offer forgiveness on outstanding balances. The state also runs the Low Income Home Energy Assistance Program, with provides up to $1,000 to families struggling with heating costs.

Pennsylvania consumers also can either chose the default generation rate or sign up with a competitive supplier, whether it’s to save a couple bucks or ensure their energy comes from renewables.

Shopping for gas and electric providers can help or hurt, according to Marx. Tricky marketing could mean that $100 sign-up gift card or introductory discount doesn’t nearly make up for pricier power over the long run.

“Shopping has to be active,” Marx said. “If you want to set it and forget it, you shouldn’t be in the competitive market.”