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Chilling Natural Gas Report Price Doubles in a Year

Posted on: Thursday, 6 October 2005, 21:00 CDT

By Anna Marie Kukec Daily Herald Business Writer

Naperville-based Nicor Gas said Wednesday the cost for natural gas during the month of October will be its highest yet - $1.17 per therm.

That's 17 percent higher than last month and double a year ago, according to documents filed with the Illinois Commerce Commission. Nicor is required each month to inform the state of the cost of natural gas, but the state does not approve the amount.

Nicor said natural gas prices continue to be volatile and both hurricanes Katrina and Rita have disrupted supplies in the Gulf Coast, forcing up the price. The Gulf produces about 20 percent of the nation's supply of natural gas.

"We cannot predict what the commodity market will do in the future, but there is a possibility gas prices can be higher in November," said Nicor spokeswoman Annette Martinez.

The average residential consumer could pay about $96 for the month of October. Last October's gas costs were 58 cents per therm and the average residential bill was about $52, said Martinez.

Nicor isn't alone. Peoples Energy and North Shore Gas posted a price of $1.13 per therm, reflecting nearly 70 percent increases over a year ago. A therm is a unit to measure quantity of heat equal to 100,000 British thermal units, or BTUs.

While higher prices have been expected nationwide, many groups still intend to scrutinize the increases.

"This is the highest price we've ever seen," said Pat Clark, associate director of Citizens Utility Board, a Chicago-based watchdog group. "It's astronomical."

U.S. Reps. Jan Schakowsky and Bobby Rush will be looking into higher natural gas prices during a hearing at 9:30 a.m. Tuesday at the Dirksen Building in downtown Chicago.

They have invited Nicor Gas, Peoples Energy and government leaders.

"The predicted spike in natural gas prices will have a major impact on homeowners, renters and businesses this winter," Schakowsky said in a statement.

"While the hurricanes had an impact on the natural gas supply, distributors receive their gas months before it reaches consumers."

The two said they want to insure consumers are provided with protection and that no company jacks up prices to profit off an impending crisis.

Natural gas prices have been higher throughout this year, Martinez said.

"In the summer, we paid record-high summer prices for the gas we put into storage due to many national factors," Martinez said. "One such factor was the hot summer weather the nation experienced, which increased demand and sent market prices higher. There are many factors that move the commodity market."

The weather indeed is a major factor, said Peggy Laramie, spokeswoman for the American Gas Association.

"Many use natural gas to generate electricity, especially during this past summer which was warmer than normal, and that puts more pressure on the price of natural gas as well," Laramie said.

Nicor Gas does not profit on the natural gas, making its money on a separate delivery charge that makes up about 20 percent of a customer's bill.

However, that part of the bill is going up also. The ICC approved a hike of about $2 a month last month, but the actual amount is still being challenged by both Nicor and CUB.

Martinez warned that weather this year is also likely to be colder than last, further inflating bills.

"We want our customers to be informed about gas costs, and we are asking them to prepare now," she said.

Nicor is urging consumers to join its budget plan, to make energy- saving improvements around the home and, if eligible, to apply for financial assistance in paying bills.

"Preparing for the heating season now will mean better management of winter bills when the cold weather comes to town," Martinez said.

Source: Daily Herald; Arlington Heights, Ill.

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