Archive for Thursday, October 20, 2005

Winter gas prices to spike

October 20, 2005

Eudora residents can expect a one-two punch in home energy bills this winter.

But unlike boxing where the lighter jab sets up the knockout punch, consumers will experience the round-house hook first.

Anticipated higher natural gas prices should come as no surprise. Even before hurricanes Katrina and Rita added stress to the markets, experts were warning consumers would be paying significantly more to heat their homes and businesses this winter.

Estimates now suggest monthly gas prices could be from 35 percent to 75 percent higher. Jim Bartling, a spokesman for Atmos Energy -- the company that serves Eudora -- said the company is estimating winter gas prices will be from 35 to 55 percent higher.

"I think if you look at that 75 percent, they are talking about the Northeast," he said. "I don't think they're talking about the Midwest."

Just where prices will land will

depend on a number of factors, especially the severity of the weather. A cold winter would create more demand for natural gas as homes and businesses burn more gas and power plant operators switch from perhaps even more costly alternative fuels.

To protect customers against even higher prices from winter demand, Atmos already has about 20 percent of the gas it will make available to customers in storage, Bartling said. Another 60 percent is on contract with various hedging instruments.

"Only about 20 percent of the gas we make available will be subject to winter market forces," Bartling said. "We make a conscientious effort to purchase gas as cheaply as possible."

Natural gas providers don't make money from higher gas prices, which by regulation they must pass on at cost, Bartling said. Atmos has an interest in lower prices because that causes less hardship on customers, and fewer unpaid or late billings, he said.

The company is expecting many of its customers will struggle this year, Bartling said, and is prepared to work with them and direct them to agencies that can help them with bills.

On the positive side, Atmos doesn't anticipate any shortage in supply this winter in Kansas, Bartling said.

Just as the shock of natural gas prices are being absorbed into post-Christmas budgets, Eudora residents can expect to see electrical rate increases.

Last summer, Westar Energy made a rate-increase application with the Kansas Corporation Commission. Public hearings before the KCC on that increase wrapped up two weeks ago, and public comment from e-mails, faxes or letters finished Sunday, said KCC public information officer Rosemary Foreman.

Westar is requesting a 9-percent or $47.8 million increase for its northern region that includes De Soto. Company officials estimate that will equate to a $5.28 monthly increase on the average residential customer's monthly bill.

The KCC has until Dec. 28 to make a decision on the request, Foreman said. It traditionally takes about 30 days for a change to go into effect, she said.

"We should be moving into February when the change becomes effective -- depending on when they make the decision," she said. "In theory, we should at least be through the worst of the winter."

But it is this winter's natural gas prices that have Foreman worried. The projected spike in winter heating bills would spread the misery beyond the traditional low-income consumers to the middle-income strata, she said.

The issue has received considerable advanced attention because of the spotlight on this year's higher gasoline prices. Still, Foreman and Bartling worry that concern for higher home-heating energy prices too often take a backseat to the immediate effect of gas pump prices.

"No matter how many times we as a company put something out, there are still people otherwise preoccupied or because it's been warm haven't been concerned about gas prices," Bartling said.

Foreman and Bartling suggested takes steps now to reduce winter energy bills, including the option of level payment plans, which spread winter bills out over a yearly payment schedule.

"It won't save you any money, but it does make the bills more manageable," Foreman said.

Other steps could be as easy as changing filters and turning down the thermostat.

"It's nice to walk into a home when it's 20 degrees and it be 75 degrees," Bartling said. "Well it's still comfortable at 65 degrees. Put a sweater on. You don't have the thermostat so high you walk around in shorts."

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