Archive for Thursday, November 11, 2004

High heating bills possible with increased natural gas prices expected

November 11, 2004

Recent trends make higher home heating bills appear inevitable. Natural gas spot and future prices have spiked in recent weeks at major markets. Jim Bartling, manager for public affairs for Atmos Energy, said last week natural gas futures increased $1 in the previous week to about $8.50 per million British thermal units.
Atmos Energy, which provides service to Eudora, took steps to protect its customers from the volatile market by storing gas purchased at lower prices and being active on the futures market when prices are favorable as a hedge against higher seasonal prices, Bartling said.
"That being said, we will have to purchase 20 to 40 percent of supply off the market," he said.
The bottom line, Bartling said, was that Atmos customers could expect to see bills 15 to 20 percent higher than last year.
Maybe. Many variables affect prices on the unregulated natural gas market, Bartling said. The most obvious is the weather. A severe winter in many parts of the country would drive up demand and prices, Bartling said. A mild winter would have the opposite effect.
But Bartling said natural gas prices were linked to petroleum prices, because many large industrial users had flexible operations that used either natural gas or petroleum-based fuel, depending on which was least expensive. When those users switched to natural gas, demand went up, he said.
Natural gas and crude oil markets esponded to real events and rumors, Bartling said. Eudora natural gas customers could see higher prices because of current rumors of a possible oil field strike in Nigeria or of a Russian oil company getting hit with a huge delinquent tax bill, he said.
"A market-driving economy can ebb and flow on rumors, just as it can a real thing like a blizzard," he said.
As a regulated utility with no production component, Atmos' profits didn't increase with increases in natural gas prices, Bartling said. If anything, higher prices had just the opposite effect, because customers used less gas and some found it more difficult to pay bills, he said.
"Utilities do not make one penny form on the cost of gas," he said. "That's a concept hard for people to grasp. We do not want a high price."
As for customers, Bartling said customers were encouraged to establish a level payment plan as a way to hedge against high monthly bills. The plan established a monthly bill based on the average of a customer's bills during the last 12 months, he said.
The company also encouraged customers to take common sense steps to decrease natural gas use in winter months, Bartling said. (See related story below).
The state's cold-weather rule took effect Nov. 2. With it, Atmos must reconnect service to disconnected customers if they pay 1/12th of their outstanding bills, 1/12th of the required deposit fee, and a $23 reconnect charge, Bartling said.
Although the cold-weather rule stays in effect until next spring, Atmos can notify delinquent customers of an intent to disconnect service if temperatures weren't forecast to drop below 35 degrees for the next 48 hours, Bartling said.
But it wasn't the company's desire to disconnect customers, Bartling said. It would work with them to arrange payment plans that would maintain service, he said.

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