December looks like it will be crunch time for rising natural gas prices, according to Pacific Gas and Electric Co., which Wednesday released a warning to its customers that it expects an 11% hike in average retail bills this month. The run-up in prices has been widely predicted by industry, utility and government sources for some time, the PG&E utility said in urging its gas customers to take steps to lessen the impact of the higher wholesale costs.
The San Francisco-based utility that covers the colder parts of the state’s northern half indicated its retail prices are influenced by national natural gas prices, and in some Midwest and Eastern areas, prices have gone up 35%, the utility told customers. PG&E’s assessment is that the increase is “largely due” to the normal seasonal increases, along with what it called “higher prices throughout the nation for all heating fuel sources.”
“As is always the case, consumers will see their bills increase significantly in December over what they were in November,” the utility said. “Residential customers will pay just under 11% higher gas bills this month, compared to last year. This year, the typical December gas bill increase is magnified somewhat by the combination of increased (wholesale) gas prices and expected increased usage.”
The utility analyzed the problem in a “Natural Gas Watch” released Wednesday, outlining various cost-reduction strategies, bill-lowering approaches, and utility-provided customer assistance programs. On average, bills are expected to jump by 10.6% over the averages in December 2003, and by nearly 80% from averages last month (November 2004).
“For the second consecutive year, prices in the United States natural gas market continue to be volatile, and, of course, the price California consumers pay for natural gas is based upon national market conditions,” the PG&E utility said. “The average residential bill for (this month) is expected to be $83.40, compared to $75.41 last December. The total rate of delivered commodity will rise from $1.06/th in December 2003 to $1.17/th in December 2004.”
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