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Utilities Warn Customers to Prepare for Sky High Winter Gas Bills

Severe economic pain will be felt this winter by natural gas customers nationwide. Utility companies in Texas, Minnesota, Alabama and elsewhere warned customers last week that winter bills will be about 40-90% higher than last winter.

Even before considering the impact of Hurricane Rita on supply, infrastructure and prices this winter, the Energy Information Administration (EIA) projected early in September that residential customers on average across the nation would experience a 46% increase in the price they pay for gas this winter compared to what they paid last winter. EIA said gas bills would be particularly high (up 71% from last winter) in the East North Central region (Ohio, Indiana, Illinois, Michigan and Wisconsin) because of anticipated higher heating-related demand in comparison to the relatively mild conditions seen last year.

The agency predicted that commercial gas bills nationwide would increase an average of 51%, while industrial customers would be paying 67% more on average than what they paid last winter.

But those September predictions may be understating the likely increases. Since Sept. 1, spot prices in the eastern United State have risen by more than $3/MMBtu, western points are up by more than $2 and the near month futures contract has risen by about $1.90/MMBtu (considering the sharp declines late last week).

Atmos Energy, the largest gas-only utility company in the nation, warned its 1.4 million customers in north and central Texas last Wednesday that residential gas bills may be 60-90% higher this winter compared to last winter.

Assuming a normal winter, the average Atmos Energy residential customer in North Central Texas could expect to pay $690 during the winter heating months of October 2005 through March 2006, the company said. That compares with an average cost during the last heating season of $367.

"Reliable natural gas service for our customers is our top priority, and we expect natural gas supplies will be adequate again this winter to meet our customers' needs," said Dick Erskine, president of Atmos Energy's Mid-Tex Division. "Gas prices, though, will be much higher than last winter, and we are quite concerned about their effect on our customers."

Erskine noted that Hurricanes Katrina and Rita disrupted about 15% of the country's gas production, which was already tight because of growing demands from power plants and other users. Cooler weather also could increase the bills customers will pay to heat their homes this winter, because the past two winters have been warmer than normal.

The latest winter temperature outlooks from the National Weather Service show high chances for above normal temperatures across the western two-thirds of the nation for the bulk of the winter and equal chances of above or below normal temperatures for the East Coast, Gulf Coast, Great Lakes and Upper Midwest.

CenterPoint Energy, which serves 760,000 residential, commercial and industrial customers in Minnesota, said Wednesday that its October residential billing price is $1.33 per therm, which is 77% higher than this time last year and the highest billing price on record for its customers. For its upcoming year (August 2005 - July 2006), the company forecasts that a typical residential customer will see a total bill that is 40% higher than last year.

In the Southeast, Alagasco, which serves about half a million customers in Alabama, said earlier this week that annual utility bills in its service territory starting Oct. 1 will rise by about 37% to $1,280 for the average residential customer. Alagasco noted that the single biggest factor that will impact a customer's bill this winter will be the amount of gas used. Conservation will be particularly important.

Atmos Energy said consumers can help manage their energy bills by enrolling in budget billing, using energy more efficiently and applying now for energy assistance if qualified.

"The challenge of satisfying the growing demand for natural gas is a national problem that calls for a national solution," Erskine said. "The Energy [Policy] Act of 2005, which became law this past summer, is a positive step designed to increase natural gas supplies, expand pipelines to transport more gas supplies to consumers, promote energy efficiency and provide more assistance to Americans hardest hit by rising energy costs.

"It will take time for these energy policies to yield more natural gas supplies. What consumers need now is for Congress to permit exploration for gas from untapped new areas, such as the Outer Continental Shelf, offshore Florida and California, and federal lands in the West. Large discoveries of gas in these areas could lower gas prices."

Dallas-based Atmos serves a total of 3.2 million gas utility customers in 12 states.

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