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Louisiana Regulators: Share Gas Bounty with Poor

High natural gas prices and declining federal support for energy assistance programs prompted the Louisiana Public Service Commission (PSC) to declare the state's first-ever "energy emergency" last Tuesday. Residents could now be able to defer paying portions of their utility bills for up to a year. The PSC also called for up to $20 million in state money to support energy assistance and efficiency programs.

The PSC called for $12 million in state money to supplement the federal Low-Income Home Energy Assistance Program (LIHEAP), noting that funding the state receives for the program has declined to $18 million this year from $30 million in 2005 (see NGI, Feb. 11). Another $8 million would go to the state's Home Energy Rebate Option (HERO) program, which promotes residential efficiency improvements. The Louisiana Department of Natural Resources (DNR) has scaled back the HERO program to preserve what funds it has, the PSC said.

Ironically enough, funding would come from revenue generated by the state's oil and gas reserves. "Louisiana oil and gas severance tax collections increased 77%, or $58 million, to $102 million from June 2007 to June 2008," the PSC's resolution says. "The revenue forecast for the current fiscal year is based on an oil price of $84/bbl, and with current oil prices exceeding $110, there will be ample revenue over and above the forecast to provide funding for state energy assistance..."

Figuring that the state gets $12.5 million for every dollar increase in the price of oil, the PSC projects that Louisiana stands to get $325 million more than the legislature budgeted at the $84/bbl forecast. The regulators noted that their counterparts in Colorado recently devoted $13 million/year through 2011 for low-income energy assistance and efficiency promotion, with the money to come from natural gas severance tax revenues.

Also last week, the Louisiana Mineral Board said it raked in $93.8 million at its August lease sale, nearly double the $48.7 million collected in July's sale (see NGI, July 21), mostly thanks to the Haynesville Shale gas play (see related story).

Louisiana PSC Commissioner Foster Campbell initiated the emergency declaration. "The state is blessed and the people are cursed because the natural gas prices are going through the roof," he said, as quoted by The Times-Picayune of New Orleans. "If we're getting rich off of severance taxes from oil and gas, we should share some of the money back with the people who are having such a hard time paying their bills."

According to the paper, Gov. Bobby Jindal supports the emergency measure and has pledged to seek funding for it.

The state's municipalities are benefiting from the gas and oil boom as well. In Bossier City -- in northwest Louisiana, which is home to the emerging Haynesville Shale gas play -- the city council recently passed a resolution saying the city will not accept less than $27,500 per acre for exploration leases and that it must retain 25% of gas produced, as reported by the Daily World in Opelousas, LA.

Under the deferred payment provision, elderly, low-income and disabled residents could be allowed to defer paying portions of their bills if they are unusually high as determined by the service provider.

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