Natural Gas Group Says Costs Will Rise Forecast Backs Up Vectren Prediction

By DAN SHAW Courier & Press staff writer 464-7519 or shawd@courierpress.com

A national gas association says the cost of natural gas will rise from 10 percent to 30 percent this winter.

That prediction, made by the American Gas Association, closely mirrors one made by Vectren Corp. last month. Vectren then had predicted gas bills paid by customers in Evansville and surrounding areas would rise between 15 percent and 25 percent.

The newest estimate comes less than a week after the Natural Gas Supply Association said the supply of natural gas should remain about the same as last year. That means that prices won’t rise as a result of there not being enough of the commodity to go around.

The American Gas Association, which represents 202

utilities throughout the country, agreed that rising prices cannot be blamed on a narrowed supply. Instead, bills will be higher because most utilities will be selling natural gas they bought over the summer – when the prices were unusually high.

“Because utilities purchase natural gas from suppliers throughout the year and store it in underground facilities for winter delivery, much of the natural gas (that) utilities will deliver to households this year was purchased when prices were at or near historic highs,” said Chris McGill, the gas association’s managing director for policy analysis.

Increased use

In most years, the cost of natural gas is low in the summer because it is not used to heat homes. But a number of factors – including the increased use of natural gas to produce electricity – has made predicting the price more difficult.

“We cannot control the market,” said Chase Kelley, a Vectren spokeswoman. “We do the best we can to find reasonable, low prices for our customers.”

Kelley noted that Vectren does not profit when the price of natural gas rises. Under Indiana law, the company must charge customers exactly what it pays for the commodity. Any profits Vectren or other utilities make come from a transmission charge set at a rate that is independent of the cost of natural gas.

In June, Vectren officials had said they believed gas bills would rise by nearly 50 percent this winter. They have since revised that estimate downward.

“We purchased in the summer,” Kelley said. “We had no idea what the September, October and November prices were going to be.”

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