The U.S. Energy Information Administration (EIA) released its Winter Fuels Outlook, and it’s good news for homeowners who heat with natural gas. According to the EIA, those homeowners will see a 9 percent dip in their fuel bills this winter, while homeowners who heat with electricity will see a 4 percent increase in costs, and those who burn oil will see a 21 percent increase.

U.S. homes primarily use natural gas (53 percent), electricity (32 percent), Propane (6 percent), and fuel oil/kerosene (5 percent) for heating. A smaller percentage of homes use wood or have no heating or other heat sources (2 percent and four percent, respectively).

Factors in Determining Estimates

Two of the largest factors driving energy prices in these forecasts are trends in overall fuel prices and regional variation in forecast temperatures. Price pressures from the Iran war have driven oil prices higher, primarily because it threatened physical oil supply. But natural gas, which is cheap and readily available, is not impacted by the conflict.

“We expect households using natural gas and propane as the primary heating fuel – collectively about half of all U.S. Households – will have lower energy expenditures this winter, primarily because of lower fuel costs. We expect higher energy expenditures for households where the primary heating fuel is electricity or heating oil because of higher prices for those fuels,” EIA’s website notes.

The National Oceanic and Atmospheric Administration (NOAA) predicts a strong El Niño this winter, with warmer temperatures in the Northeast, much colder temperatures in the West, and temperatures similar to last year in the Midwest and South. EIA says weather can affect household heating in two ways: first, cold weather raises the energy needed to keep a house at a specific temperature. Second, cold weather raises aggregate demand and can disrupt supply, driving up energy prices. Those price increases can be more severe if fuel inventories are relatively low. “In the cases we consider, we adjust for both effects,” the agency notes.

Homeowners Can Act

To reduce a home’s energy costs, first reduce the home’s overall heating load, then improve the efficiency of the equipment that supplies the remaining heat. In terms of priorities, these are the five most important actions, according to ENERGY STAR:

1. Air-seal the building envelope – this stops heat from escaping and cold air from entering.
2. Insulate the attic/roof assembly – One of the highest-impact areas because heat rises, and poorly insulated attics can lose substantial heat.
3. Insulate exterior walls – This reduces heat transfer through the largest surface area of many homes and is particularly important in older homes.
4. Improve basement/crawl space insulation – This cuts heat loss through floors and helps reduce drafts from below.
5. Upgrade heating equipment – upgrade to a high-efficiency furnace/boiler or modern heat pump after addressing the building envelope to reduce energy consumption substantially.

Rebates Can Make Improvements Feasible

The upfront costs of an insulation retrofit and equipment upgrades can tank any potential retrofit activity. Still, current Inflation Reduction Act home energy rebate funds can help homeowners manage the costs.

Every U.S. state (except South Dakota) currently has funds available through the IRA’s Home Efficiency Rebates (HOMES), which provide:

• Up to $4,000 depending on energy savings achieved
• Up to $8,000 for qualifying low-income households.
• Insulation and air sealing are eligible improvements.

For the IRA’s Home Electrification & Appliance Rebates (HEAR), an income-qualified rebate is available for efficient electric equipment and enabling upgrades. That program provides:

• Up to $1,600 for insulation, air sealing, and ventilation
• Up to $8,000 for a heat pump; and
• A $14,000 maximum benefit per household

Importantly, the envelope rebate can reduce loads before sizing and installing new equipment.

Retrofits Are a Hedge Against Energy Cost Increases

In a tough economy, with inflation taking a larger chunk of household income, rising energy costs could further strain household budgets. Finding ways to reduce costs over the long term is a smart bet. Homeowners can check their State Energy Office website for rebate eligibility details and take advantage of these rebates now, before funds run out.