States Moving to Ensure Winter Gas Supply with Rate Hikes
The California power debacle, with its political and financial
ramifications, coupled with high natural gas and heating oil prices
and dire government warnings of even worse prices this winter, has
led to a host of actions by those who deal with retail customers
As utilities across the nation were raising their rates for
natural gas by as much as 50%, the New York Public Service
Commission (NYPSC) took one of the strongest actions so far last
week in an effort to ensure that there's enough natural gas and oil
for interruptible customers this coming winter.
Calling a repetition of last winter's problems "unacceptable,"
NYPSC Chair Maureen O. Helmer said "after a series of warm winters,
many interruptible gas customers in New York assumed that fuels
would be available at reasonable prices on demand. Two weeks of
cold weather last winter forced unprepared interruptible customers
to either remain on utility systems or to attempt to purchase
alternate fuel supplies on the spot market in competition with
other consumers, affecting natural gas supplies and prices."
Because changes in oil suppliers' inventory practices have added
more risks to fuel oil availability at all times, the commission
voted to require that alternate fuels be on site at the start of
the winter season. The commission also approved a three-part
strategy to be implemented this fall by local gas utilities. The
measures are designed to ensure that the interruptible gas
customers are in fact, interruptible, that is, that they are
prepared to be interrupted, and that they have other options
The utilities will be required to ensure that these customers
are prepared to leave the gas system during times when demand
peaks, and thus provide a level of reliability for all gas
customers. Each utility will be required to do the following:
ensure that its interruptible customers have the equivalent, either
through storage or some other arrangements, of a minimum seven- to
10-day supply of alternate fuel by Oct. 1, depending on the
utility's interruptible criteria; implement a plan to check
compliance with interruptible customer requirements; and establish
a higher rate for natural gas service for those interruptible
customers found to not be in compliance with the rules.
The NYPSC stressed that the storage supply does not mean that
facilities have to construct new storage areas. Rather, the
customers must, to provide evidence that they can meet the
requirement in an equivalent manner. Those customers also will be
on notice that they have to be prepared to meet interruptions that
could be longer than the minimum standard set by the commission.
The marketers' rules were set to ensure that they would be able
to deliver gas to their customers without any interruption in
service during critical winter months. In approving the marketers'
rules, the commission adopted a set of procedures designed to
Utilities affected by the commission's action include Central
Hudson Gas & Electric, Consolidated Edison of New York, KeySpan
Energy Delivery, National Fuel Gas., New York State Electric and
Gas, Orange and Rockland Utilities, and Niagara Mohawk Power.
Meanwhile, a steady stream of announcements --- warnings, rate
hikes and energy-efficiency tips --- has been emanating from
utilities over recent weeks. A sampling:
TECO Peoples Gas: The Florida Public Service Commission agreed
to a rate hike of as much as 8% for the state's largest natural gas
provider, following in the footsteps of its sister company, Tampa
Electric, which is raising its rates 3.3%.
Reliant Energy HL&P: Houston-area electric bills will see a
short-term rise of about 12% after the energy company got its
request approved last week by Texas regulators. It had been seeking
a 14% hike to cover natural gas prices. The increase is not
permanent --- the fuel rate comes up for review twice a year before
the Public Utilities Commission. TXU Corp., which also serves
customers, has received permission to increase its natural gas
Cincinnati Gas & Electric: Customers of CG&E and The
Union Light, Heat and Power Co. will see a 12% increase in natural
gas prices this fall. The companies serve customers in Ohio and
Dayton Power & Light: Miami Valley, OH, residents will see a
rate hike of as much as 25% this winter to match the prices
DP&L is charged by its supplier. Neighboring Cinergy customers
will pay about 26% more for their natural gas, a slightly higher
rate because the Cincinnati-area utility has higher related costs.
PG Energy: The company asked the Pennsylvania Public Utility
Commission last week for permission to raise its commodity charge
to $5.71 Mcf from $3.76 Mcf of natural gas, effective Dec. 1. The
PUC is expected to rule on this request in the next three weeks.
Northwest Natural Gas: This Oregon company is asking for a rate
increase of up to 25%, and regulators are expected to come close to
the figure, affecting customers' bills in October. Cascade Natural
Gas and Avista, with customers in other parts of Oregon, also want
rate hikes, and plan to ask for them before the end of the month.
This is not likely to be the final word. Most utilities are
allowed to recover retroactively any excess gas costs they have had
to pay out.
Carolyn Davis, Houston