NGI The Weekly Gas Market Report
The California power debacle, with its political and financialramifications, coupled with high natural gas and heating oil pricesand dire government warnings of even worse prices this winter, hasled to a host of actions by those who deal with retail customersand constituents.
As utilities across the nation were raising their rates fornatural gas by as much as 50%, the New York Public ServiceCommission (NYPSC) took one of the strongest actions so far lastweek in an effort to ensure that there’s enough natural gas and oilfor 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 fuelswould be available at reasonable prices on demand. Two weeks ofcold weather last winter forced unprepared interruptible customersto either remain on utility systems or to attempt to purchasealternate fuel supplies on the spot market in competition withother consumers, affecting natural gas supplies and prices.”
Because changes in oil suppliers’ inventory practices have addedmore risks to fuel oil availability at all times, the commissionvoted to require that alternate fuels be on site at the start ofthe winter season. The commission also approved a three-partstrategy to be implemented this fall by local gas utilities. Themeasures are designed to ensure that the interruptible gascustomers are in fact, interruptible, that is, that they areprepared to be interrupted, and that they have other optionsavailable.
The utilities will be required to ensure that these customersare prepared to leave the gas system during times when demandpeaks, and thus provide a level of reliability for all gascustomers. Each utility will be required to do the following:ensure that its interruptible customers have the equivalent, eitherthrough storage or some other arrangements, of a minimum seven- to10-day supply of alternate fuel by Oct. 1, depending on theutility’s interruptible criteria; implement a plan to checkcompliance with interruptible customer requirements; and establisha higher rate for natural gas service for those interruptiblecustomers found to not be in compliance with the rules.
The NYPSC stressed that the storage supply does not mean thatfacilities have to construct new storage areas. Rather, thecustomers must, to provide evidence that they can meet therequirement in an equivalent manner. Those customers also will beon notice that they have to be prepared to meet interruptions thatcould be longer than the minimum standard set by the commission.
The marketers’ rules were set to ensure that they would be ableto deliver gas to their customers without any interruption inservice during critical winter months. In approving the marketers’rules, the commission adopted a set of procedures designed toensure compliance.
Utilities affected by the commission’s action include CentralHudson Gas & Electric, Consolidated Edison of New York, KeySpanEnergy Delivery, National Fuel Gas., New York State Electric andGas, Orange and Rockland Utilities, and Niagara Mohawk Power.
Meanwhile, a steady stream of announcements — warnings, ratehikes and energy-efficiency tips — has been emanating fromutilities over recent weeks. A sampling:
TECO Peoples Gas: The Florida Public Service Commission agreedto a rate hike of as much as 8% for the state’s largest natural gasprovider, following in the footsteps of its sister company, TampaElectric, which is raising its rates 3.3%.
Reliant Energy HL&P: Houston-area electric bills will see ashort-term rise of about 12% after the energy company got itsrequest approved last week by Texas regulators. It had been seekinga 14% hike to cover natural gas prices. The increase is notpermanent — the fuel rate comes up for review twice a year beforethe Public Utilities Commission. TXU Corp., which also servescustomers, has received permission to increase its natural gasbills 6%.
Cincinnati Gas & Electric: Customers of CG&E and TheUnion Light, Heat and Power Co. will see a 12% increase in naturalgas prices this fall. The companies serve customers in Ohio andKentucky.
Dayton Power & Light: Miami Valley, OH, residents will see arate hike of as much as 25% this winter to match the pricesDP&L is charged by its supplier. Neighboring Cinergy customerswill pay about 26% more for their natural gas, a slightly higherrate because the Cincinnati-area utility has higher related costs.
PG Energy: The company asked the Pennsylvania Public UtilityCommission last week for permission to raise its commodity chargeto $5.71 Mcf from $3.76 Mcf of natural gas, effective Dec. 1. ThePUC is expected to rule on this request in the next three weeks.
Northwest Natural Gas: This Oregon company is asking for a rateincrease of up to 25%, and regulators are expected to come close tothe figure, affecting customers’ bills in October. Cascade NaturalGas and Avista, with customers in other parts of Oregon, also wantrate hikes, and plan to ask for them before the end of the month.
This is not likely to be the final word. Most utilities areallowed to recover retroactively any excess gas costs they have hadto pay out.
Carolyn Davis, Houston
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