A lot of people are worried about how much they are going to be spending on energy during the winter time. After all, it did get cold last year and many people really felt the shock from heating their homes during some of the coldest weather on record. Massive snow storms hit Dallas/Ft. Worth and both Houston and Galveston experienced their 5th coldest February on record.

Luckily this year, there’s some good news from forecasters. The first is that the National Oceanic and Atmospheric Agency has announced 4 percent fewer heating days in the north and nearly 17 percent fewer in the south this winter. Specifically, Texas residents can look forward to weather that is “warmer and drier than average through February 2011”.

So, warm weather in Texas means lower electricity bills this winter. But why is it also important that there’s not as much cold weather up north?

The reason is natural gas. The midwest largely relies on natural gas for heating during the winter. A warmer winter up north means more natural gas will remain in storage. Since half of Texas electricity is made from natural gas generating plants, the natural gas surplus translates into lower Texas eletricity prices. For example, in May, the Department of Energy’s Information Agency (EIA) reported that the average price of Texas electricity was 11.6 cents/kwh and would rise to 11.9 cents/kwh in 2011. The real average price dropped to just over 10 cents/kwh partly because the moderate fall weather pushed demand down and natural gas prices dipped lower.

Let’s chew over some market information:

On October 29, 2010, working natural gas in storage rose to 3,821 billion cubic feet (Bcf). This is more than the 3,784 Bcf storage mark reached at the end of October 2009 (the record was record-high 3,837 Bcf in storage on November 27, 2009).

Domestic natural gas production is still high -to the point where it is costing the industry. The number of natural gas drilling rigs reported by Baker Hughes increased from a low of 665 in July 2009 to 973 in April 2010. Many of those were in horizontal drilling rigs drilling for “shale gas” in Texas and north central Pennsylvania. Over the last 6 months the natural gas rig count stayed relatively unchanged, partly due to the drilling moratorium in the Gulf of Mexico invoked after the BP oil spill in April.

Demand, meanwhile, has remained relatively low over the fall. Weather was mild in most of the country, including the south and Texas. There were only 2 hurricanes during the whole season that posed any threats to offshore platforms and infrastructure. Again, low demand contributed to high amounts of gas in storage.

The Henry Hub spot price (also known as the New York Mercantile Exhange, NYMEX) averaged $3.45 per million Btu (MMBtu) in October. This was $0.43 per MMBtu lower than the average spot price in September of $3.88/MMBtu. September’s comparatively high price reflected unease over hurricane threats. For example, on September 21, mid-afternoon prices for October delivery at the Henry Hub were $3.82/ MMbtu. Later that day, the price rose 9 cents to $3.91 when the National Hurricane Center announced an Atlantic storm forming that potentially threatened gas rigs in the Gulf of Mexico.

The predicted average natural gas price at NYMEX is $4.22/mmBtu in January, 2011. This is due to the seasonal rise in heating demand and there will be a few price spikes. But, as was already mentioned, warmer temperaturse are expected. As of the opening week of December, the future January NYMEX price was 4.349/mmBtu. Last year, the January price closed at about $5.80/mmBtu – over a dollar higher than the current price.

Prices through March show very, very little change with a slight dip in the spring reflecting the seasonal low demand for heat in the north and electricity for air conditioning in the south.

Prices might surge next January as the industry finally ramps production back down and the storage surplus is used up. If the economy begins to get more traction, demand will likely rise as well.

In other words, it’s a really, really good time to shop for cheap electricity this year.

If you sign on to a two year (24 month) plan now, you can lock in the current low winter 2010 rate through 2012. Switching now when rates are low could save you hundreds of dollars through the next two years. Why? Because you can take advantage of a long-term fixed-rate energy plan that locks in the current low energy price. As mentioned, natural gas prices are expected to be mostly flat in 2011 but will likely to rise in January, 2012.

Consider the current NYMEX price for January Natural Gas: $4.349/mmBtu. The current NYMEX price for January 2012 natural gas is $5.257/mmBtu. That’s an increase of more than 21%. Right now, if your energy plan is locked in at 10.4