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THE ‘CANARY IN THE COALMINE’: More than 20 million U.S. households—or one in six— are behind on their monthly utility payment, according to the National Energy Assistance Directors Association, due to high electricity prices and soaring natural gas costs that have prompted fears of massive shutoffs ahead of the winter season.

The cumulative amount owed has also soared to $16 billion, NEADA found—nearly doubling the pre-pandemic total of $8.1 billion.

And Americans who are behind on their payments now owe an average of $792 on their utilities, a 97% increase since 2019, when the average amount owed was just $403.

“The biggest issue is that the amount owed has increased significantly, and it's staying high,” NEADA executive director Mark Wolfe told Breanne in an interview.

Soaring natural gas prices are driving the problem. U.S. natural gas prices spiked last week to their highest point in 14 years, and analysts have warned of even more increases in the months ahead that could drive up consumers’ bills.

Natural gas prices were up 30.5% in July compared to the same point last year, rising from $3.84 per million British thermal units (mmBTu), to $7.28 mmBTu, according to data from the U.S. Energy Information Administration.

The high natural gas prices have led to a 13% increase in electricity bills on average.

Wolfe said the number of Americans with unpaid utility bills is “like a canary in the coalmine.”

“I think the utility debt numbers are an indicator of the overall health of the bottom 40% of the U.S. population,” he told Breanne. “And it's a warning sign that they're struggling. Everybody's talking about pieces of puzzle, but this really to me is an excellent indicator of how families are coping. And I don't think it's gotten enough attention.”

“If these bills continue to increase faster than inflation, they’ll become unaffordable under the current structure for lower-income families,” Wolfe added.

“Virtually all of our fundamental and technical indicators continue to flash green lights toward higher price levels” for natural gas, trading firm Ritterbusch & Associates said in a note last week cited by the Wall Street Journal. They added that prices could climb as high as $11.90 per million British thermal units, (mmBTu).

That’s expected to worsen this winter, as high natural gas prices and strong global demand continue to squeeze the market.

Europe’s gas crisis has also compounded the problem: Leaders there are racing to secure new gas supplies to help fill their storage tanks before winter to bridge their transition off of Russian fossil fuels, but that’s created more demand in the global market, and placed more strain on the U.S., whose natural gas exports to the bloc have soared in recent months.

“We've gone from a period of very low energy prices to very volatile energy prices,” Wolfe said. That’s “very troubling”— and even more so because these high costs aren’t likely to abate anytime soon.

Utility companies “aren’t set up to deal with this many people falling behind,” he added. “They’re set up to deal with people having lower debt numbers.” The “tools they have,” such as putting people on a payment plan, “all work when people owe less. It doesn’t work when people owe as much as they do.”

Welcome to Daily on Energy, written by Washington Examiner Energy and Environment Writers Jeremy Beaman (@jeremywbeaman) and Breanne Deppisch (@breanne_dep). Email [email protected] or [email protected] for tips, suggestions, calendar items, and anything else. If a friend sent this to you and you’d like to sign up, click here. If signing up doesn’t work, shoot us an email, and we’ll add you to our list.

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EUROPE SHOULD BE PREPARED FOR SEVERAL YEARS OF GAS RATIONING, SAYS SHELL CEO: Shell CEO Ben van Beurden said today that it is “unlikely” Europe’s gas crisis will last just one winter, warning the region that it may have to prepare for several years of gas rationing as it prepares for a future without Russian fossil fuels.

Speaking at an event in Norway, van Beurden said the energy supply crisis is unlikely to be limited “to just one winter” in the bloc.

“It may well be that we have a number of winters where we have to somehow find solutions through efficiency savings, through rationing and a very, very quick buildout of alternatives,” he said. “That this is going to be somehow easy, or over, I think is a fantasy that we should put aside.”

TotalEnergies CEO Patrick Pouyanné also echoed his warning about the length of the gas crisis, adding: “My advice to the European governments and policymakers is you have to think without [Russian gas], and if you think without it we will manage,” he said. “There is enough energy in this planet to do without it.”

U.N. INSPECTORS TRAVEL TO ZAPORIZHZHIA NUCLEAR PLANT: The International Atomic Energy Agency (IAEA) has dispatched a team of nuclear experts to inspect the Zaporizhzhia nuclear power plant in Ukraine, a long-awaited mission that comes nearly six months after the facility fell under Russian control in March.

“The day has come,” said IAEA Director-General Rafael Grossi, who is leading the mission along with 13 other experts. He noted on Twitter that the team is expected to reach the facility “later this week,” though he declined to share more specifics.

During the mission, inspectors will assess the facility and any damage to the plant, and evaluate working conditions at the nuclear power plant.

Grossi and other experts have urged Russia and Ukraine for months to let them inspect the facility, which has been hard-hit by recent shelling and fighting in the area. The visit also comes hours after Ukraine accused Russia of launching new rocket and artillery strikes near the facility, intensifying new fears of a nuclear catastrophe.

Ukrainian Foreign Minister Dmytro Kuleba told reporters in Stockholm today, “without an exaggeration, this mission will be the hardest in the history of IAEA.”

“We expect from the mission a clear statement of facts, of violation of all nuclear, of nuclear safety protocols,” Kuleba added. “We know that Russia is putting not only Ukraine, but also the entire world at risk of nuclear accident.”

HONDA AND LG TO BUILD $4 BILLION EV BATTERY PLANT IN THE U.S.: Honda and LG announced they will spend $4.4 billion to build a new EV battery plant in the U.S., with construction beginning as early as 2023— part of the race to comply with a new EV tax credit requiring all eligible vehicles be assembled in North America.

The joint venture is expected to have an annual capacity of roughly 40 gigawatt-hours, Honda said in a new company filing, with mass production expected to start as early as 2025.

The location of the EV battery plant has not yet been decided, though Bloomberg noted earlier this summer that Ohio, where Honda already has a plant, could be a front-runner.

OIL PRICES RISE ON PROSPECT OF OPEC+ SUPPLY CUT: Oil prices edged higher today after Saudi Arabia raised the prospect of an OPEC+ production cut. Futures for international benchmark Brent crude increased by 16 cents to $101.15 a barrel, while futures for U.S.-based West Texas Intermediate, increased by 43 cents, to $93.48 a barrel.

"Oil prices are inching higher on hopes of a production cut from OPEC and its allies to restore market balance in response to the revival of Iran's nuclear deal," Sugandha Sachdeva, the vice president of commodity research at Religare Broking, told Reuters.

OPEC+ countries are slated to meet early next week to discuss policy.

NEW TESLA ‘VIRTUAL POWER PLANT’ IN JAPAN: Tesla has announced its newest “virtual power plant,” on the island of Miyako-jima, in the Okinawa Prefecture of Japan.

The plant really consists of distributed Tesla Powerwalls, organized for grid management and to allow households to get incentives for releasing power generated via solar panels at times of greater demand, per Electrek.

Tesla has set up similar virtual power plants in California, Texas, and Australia.

RELATED – MUSK MAKES THE CASE FOR OIL AND GAS: “Realistically I think we need to use oil and gas in the short term, because otherwise civilization will crumble,” Musk said at an energy conference in Stavanger, Norway, according to CNBC.

He said that additional drilling by Norway, a major oil-producing country, was warranted.

Musk also weighed in on nuclear power on Friday, tweeting that Congress should back construction of new plants and that it is “insane from a national security standpoint & bad for the environment to shut them down.”

The Rundown

Washington Post In fast-warming Nevada, climate bill may not lift Democrats

Wall Street Journal Russia confounds the West by recapturing its oil riches

Reuters Canada sees west coast LNG revival as world scrambles for gas

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Calendar

TUESDAY | AUGUST 30

9:30 a.m. Silver Spring, Md. The Department of Commerce and the National Oceanic and Atmospheric Administration will hold a meeting of the Science Advisory Board; tasked with reviewing NOAA activities and priorities. Learn more about the advisory board meeting and register here.

THURSDAY | SEPTEMBER 1

1 p.m. The White House, the EPA’s Office of Water, and the American Association for the Advancement of Science (AAAS) hold a virtual discussion titled. "Regional Reflections on Green Infrastructure and Nature-Based Solutions: Southwest." Register for the virtual event here.