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Natural Gas Bills Predicted to Rise As Much As 33 Percent in MD This Winter

Posted on: Tuesday, 20 September 2005, 21:00 CDT

Tight supplies of natural gas, disrupted further by Hurricane Katrina, could force residential natural gas bills higher by as much as 33 percent in Maryland this winter, according to early estimates released yesterday by two utilities.

I don't' see a quick end to this tightness of supply and demand, said Scott D. Phelps, director of energy supply services for Columbia Gas of Maryland Inc.

The comments were part of an annual retail gas market conference held by state regulators to determine the state's supply and pricing projections for the coming winter months.

Officials of Baltimore Gas & Electric Co., which supplies gas to about 620,000 households in Central Maryland, estimated bills would rise between 25 percent and 33 percent. For the months of November through March, that increase would mean total winter heating bills ranging from about $810 to $860 - about $200 more than last year's total winter heating dues.

Executives from Washington Gas Light Co. projected total winter heating bills would increase about 20 percent to 30 percent in their service territories in the Washington suburbs. The higher rate amounts to a $190 to $300 price hike for the winter.

Columbia Gas said it wouldn't have estimates until at least the end of the month.

Gas prices have been climbing for some time. The commodity was already 30 percent more expensive this summer than the same time last year, according to BGE estimates.

Global supply has not been keeping up with demand. And U.S. energy practices haven't helped, according to an economics professor at the University of Maryland, College Park.

Prices are going to be a little bit higher because of Katrina. But they were going to be higher anyway, said economics professor Peter Morici.

Building more nuclear plants and more liquefied natural gas terminals, as well as cars with better gas mileage, could all help ease demand, Morici said.

Still, Hurricane Katrina bears much of the blame for the bills that will arrive this winter. The category 4 hurricane that devastated the Gulf Coast last month temporarily knocked much of the nation's energy production offline. It damaged 14 drilling rigs, 37 shelf platforms and three gas processing plants, among other structures, according to BGE.

Prices were already high but moved up a couple of dollars from that single event, Phelps said yesterday. As he spoke, crude oil and gasoline prices rose and natural gas surged to an all-time high as traders anticipated further supply restrictions caused by damage from Tropical Storm Rita, which was gaining strength as it spun through the Gulf of Mexico.

Projections could have been higher. Both BGE and Washington Gas said their customer bills would be tempered from surging energy costs somewhat by supplies built earlier in the summer. BGE, for example, bought 40 percent of its winter supply of natural gas during the summer.

Still, regulators expressed concern and urged utilities to educate lower-income consumers about energy assistance programs available through the Office of Home Energy Programs.

This is going to be a very abnormally high winter, said Kenneth D. Schisler, chairman of the Public Service Commission. This is going to be an energy crisis in terms of Maryland consumers.

Source: The Daily Record (Baltimore)

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