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NWE Natural Gas Prices to Increase

Posted on: Monday, 22 August 2005, 03:01 CDT

HELENA - NorthWestern Energy's 166,000 natural gas customers in Montana can expect to pay more this winter for natural gas, company officials told state regulators Friday.

John Hines, director of energy supply for NorthWestern, told Montana's Public Service Commission that gas rates are on the rise, although just how much more people will have to pay this winter remains to be seen.

Hines said the increase could be close to $15 to $20 a month, although he cautioned that number was a guess and said later he is still working on coming up with a more accurate assessment.

The increase has two causes, he said.

First, NorthWestern customers have been getting rebates for the past several months because the company overcollected in the past. Those rebates expire in the next month or two.

The biggest driver, however, is the soaring cost of natural gas in the global market.

"We're very much akin to the gas station on the comer," Hines said in an interview after the meeting. NorthWestern buys natural gas on the open market The company makes money only by delivering the gas to homes and businesses. So, as the global cost of gas goes up, the more Montana customers pay, even as NorthWestern's profits from the gas stays the same

Globally, the cost of natural gas is ballooning. In just the last two months, the estimated cost of a dekatherm of natural gas over the next year has increased 80 cents.

"China's demand is increasing rapidly," Hines said. "The appetite for natural gas in developing countries is phenomenal."

Plus, natural gas also is being used to generate electricity, not just as a heating fuel, said Claudia Rapkoch, a spokeswoman for NorthWestern.

Commissioner Tom Schneider, D-Helena, said he didn't think the cost is a result of Enron-style price gouging, as occurred nationally in early 2001. But he added that had the 1997 Montana Legislature not legalized energy deregulation, Montanans would be somewhat buffered from increasing gas prices.

Before deregulation, the Montana Power Co owned its own gas fields and didnt have to buy as much gas on the open market as NorthWestern does. At the time, Schneider said, those fields made up about 45 percent of the gas used in Montana. Since then, the fields have been less productive and would comprise about 20 percent of the gas Montanans use today.

Copyright Billings Gazette Jul 23, 2005

Source: Billings Gazette, The

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