Rate Hike Frenzy Takes Place Nationwide
From coast to coast, utilities and local distribution companies
(LDCs) are preparing for the peak natural gas-usage season this
winter by filing rate hikes with regulators, and bracing their
customers for inflated gas prices that are still to come.
"Soaring prices" and "lower than normal storage" were phrases
that were sounded repeatedly at the Governors' Natural Gas Summit
last week in which governors, industry experts and other
participants gathered in Ohio to discuss strategies and alert
customers of what is to come this winter.
"We want Ohioans and all Americans to be prepared," said Bob
Taft, governor of Ohio. "Our first step is to help consumers, both
residential and industrial, develop strategies to address the
rising natural gas costs we will face this winter. It is critical
that states take the lead in making sure our low and fixed-income
citizens are assured of affordable supplies to heat their homes in
the winter months. Today's summit also served as an excellent
opportunity to educate decision makers and to starting developing
strategies to expand the natural gas supply here in Ohio and across
With historically low gas storage levels and wholesale prices
already at record highs, home and business owners from Rhode Island
to Oregon are being advised by their respective suppliers of just
what's in store when the mercury drops.
"We do not want consumers to be surprised by higher natural gas
bills this winter," said Ken Lawrence, president, PECO Energy.
"Energy prices are up significantly across the country. This is a
national phenomenon not unique to PECO, or natural gas."
Effective on the first of this month, the rate which was
submitted to the Pennsylvania Public Utility Commission for PECO's
suburban natural gas customers rose 6.5%, from 71.8 to 76 cents per
ccf. PECO plans on raising its rate again come Dec. 1, to 85 or 90
cents per ccf based on continued higher wholesale prices. PECO's
Pennsylvania residential customers who paid $136 for a month's
usage of 200 ccf last year, will pay about $172 a month this year.
"The high prices should be temporary, but the period of time is
uncertain. That will depend on how cold it is this winter and
demand over the long term. The critical point for consumers this
year is the higher prices coupled with the expectation of a colder
winter will affect all of us."
PECO, however, is not the only company firing the emergency
flare into the sky. The Rhode Island Public Utilities Commission
will hear Providence Gas' rate hike case on Sept. 27. Providence
Gas is filing for an increase of $2.18 per Mcf to be effective Oct.
1, which will boost Rhode Islanders' average annual bill by
approximately $237, or 22.4%.
Unitil/Fitchburg Gas and Electric (FG&E), a gas and electric
retail distributor, has likewise filed with the Massachusetts
Department of Energy and Telecommunications seeking an 11.5%
increase on gas over last winter's rates. A typical FG&E
residential customer using 146 therms of gas per month can expect
an increase of $14.11 on their bill if the department approves it.
Central Illinois Light Co. (CILCO) is another example. CILCO
began a campaign entitled Operation Energy Smart to prepare its
customers for gas prices it said would be "at least 50% higher"
than last winter. The program is attempting to teach customers
energy saving tips, and inform them of billing plans, which might
be helpful. "We don't want anyone to be surprised when cold weather
arrives," said Neal Johnson, CILCO legislative & public affairs
representative. "For the last three years natural gas prices have
been stable. But natural gas is a commodity and as such it is
subject to the fluctuations of the market's supply and demand."
Cleveland-based Dominion East Ohio filed last Friday with the
Public Utility Commission of Ohio to increase its rate from $6.15
to $7.18 per Mcf. Based on this new rate increase which will be
effective in late October, residential customers can expect to pay
$70 more per month during November, December and January, when
compared to a year ago.
"Despite significant national market price increases, our
company has continued purchasing and injecting natural gas into our
storage fields, as scheduled, to ensure that we'll have sufficient
supplies to serve our customers this winter," noted Edgar M. Roach,
Dominion East Ohio CEO.
Xcel Energy's Public Service Co. of Colorado last week filed a
gas cost adjustment with the Colorado Public Utilities Commission
seeking a $126.2 million annual increase for natural gas costs. If
approved, the increase since Oct. 1999 would be $28.75 or 39.6% per
month for residential customers and $146.16 or 48.6% per month for
commercial customers. "While everyone seems to notice the high cost
of gasoline at the pump, many of our customers are not aware that
natural gas prices in the marketplace have climbed to unprecedented
heights," said Cynthia Evans, Xcel Energy's vice president for
Colorado, Wyoming and Arizona.
"If they haven't already, now is the time for our customers to
consider things they might do to reduce their natural gas
consumption this winter," said Evans. "There are many private
contractors in the area that provide home energy audits and
This small sample of the nation's utilities and LDCs ends in
Oregon, where Portland-based Northwest Natural Gas filed last month
with the Oregon Public Utility Commission to increase its rate by
24% due to the rise in price of gas. The company said increased use
of natural gas to power electricity generating plants has made
demand outweigh the available supply. Northwest is offering its
customers different pay programs to help ease the inflated cost of
CILCO's Johnson summed up the problem, "The cost of natural gas
was cheap for so long, they [exploration & production] really
were not doing any exploration or putting anymore rigs in the
ground..... There [also] have been a lot of conversions over to
natural gas because it is still a better bargain. All these
additional market demands increased, and the supply hadn't. Now we
are seeing more exploration and drill rigs being put into the
ground to explore and expand the supply, but there is usually a six
to seven month lag before you will see any price relief at the
wellhead. That's not going to do our customers any good during the