Autumn is officially here, which means winter is you know where. And this year, winter promises to bring soaring energy costs that will stretch the budgets of even the most far-sighted co-op and condo boards.
Con Edison has predicted that a typical customer’s electric bill in its territory in New York City will climb 22% from last winter, The New York Times reports, and it expects the typical natural gas user’s bill for heating and cooking to jump 32%.
National Grid, which supplies natural gas in Brooklyn, Staten Island and parts of Queens, projected a 28% increase from last year. It said the increase for its customers on Long Island would be 29% from last year. Single-family homes with oil heat in New York would spend $239 more over the coming five-month heating season than they spent a year ago, or an average of $2,115 this winter, up from $1,876 last winter.
Con Edison acknowledged the pain that higher bills can cause by releasing its winter forecast this month, rather than in late October or early November, as in past years. The timing was designed to give consumers more time to prepare. The utility attributed the increases to the cost of natural gas. Of the $112 increase for gas customers, it said that $90 was for the gas, and that it was just passing along the price it pays because it does not mark up the wholesale price.
Higher gas prices also affect the cost of electricity because generating plants run mainly on natural gas, so whenever the price of natural gas goes up, it is followed by a corresponding increase in the cost of electricity. This is one more reason why clean-energy advocates hope to power the electric grid with energy from renewable sources and eventually abandon fossil fuels.
This is bad news for co-op and condo boards, which prepared budgets for the current calendar year last autumn — before Russia's invasion of Ukraine helped turn global energy markets upside down. So what is a co-op or condo board to do when hit with unforeseeable — and possibly budget-busting — midyear spikes in energy costs?
Robert Ferrara, president of Ferrara Management Group, has been dealing with the rising costs since mid-summer. "Of the 100 properties in our portfolio," he tells Habitat, "about 20% administered a fuel assessment of maintenance increase in August because of the rises we had already seen." That was a month before Con Edison issued its dire warning about the looming winter.
Some boards have energy contracts with floating costs while others have fixed costs and some opt for a mix of the two. Ferrara says that some clients with locked-in energy contracts saw their contracts expire earlier this year — and were confronted with heating oil costs that had leaped from $1,89 a gallon to more than $4 a gallon. Prices fluctuate daily.
After years of fairly stable energy costs, boards need to get ready for some unfamiliar and unwelcome turbulence. "This," Ferrara says, "is an anomaly for us."
Engage, enrage, ask questions and give answers with your community of board members. Submit your questions and comments here!
Co-op and condo board business broken down into bite-sized bits - 2 stories each week. Read now on all digital devices.