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States Moving to Ensure Winter Gas Supply with Rate Hikes

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 and constituents.

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 available.

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 ensure compliance.

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 bills 6%.

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 Kentucky.

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

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