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Energy Commission: State Natural Gas Prices to Rise

Posted on: Friday, 7 October 2005, 18:00 CDT

By Bradley J. Fikes, North County Times, Escondido, Calif.

Oct. 5--Natural gas will be more expensive in California this winter through spring 2006, but the supply is reliable, California Energy Commission Chairman Joseph Desmond said Tuesday.

"There's a sufficient supply of gas, but it's going to cost more," Desmond said. The commission is the main energy policy and planning agency for the state.

Consumers can expect to see higher electricity bills at some point, Desmond said, since most electricity producers use natural gas in their plants.

Energy analysts estimate that California consumers will pay "a near all-time high, nearly $16 billion in commodity costs," Desmond said.

For residential homes, utilities have warned that means a jump of between 45 percent and 70 percent over last year's monthly bills.

He said indirect effects from the disruption of Gulf Coast suppliers hit by Hurricane Katrina will boost prices by taking away supply that could have gone to California.

"Natural gas is becoming a national market," Desmond said. However, he said, California currently pays less than what other states pay for natural gas.

California depends on outside providers for the vast majority of its natural gas. Just 13 percent of the state's natural gas comes from inside the state, Desmond said, with the rest coming from Canada, and the Rocky Mountain and Southwestern states.

"We find ourselves at the end of a pipeline," he said. "The long-term supply-demand balance is pessimistic."

Analysts generally agree that, before the winter heating season, the United States needs more than 3 trillion cubic feet of natural gas in underground storage in order to accommodate anticipated daily demand of about 61 billion cubic feet. At the moment, domestic storage is about 2.9 trillion cubic feet, and there are a few weeks left in the so-called injection period, when gas is put into storage by utilities and others.

U.S. utilities are using 2.5 billion cubic feet a day less natural gas than last year, as they switch to less expensive energy sources, such as coal and nuclear energy, according to the Natural Gas Supply Association.

Desmond urged consumers to economize on use of natural gas, including by using well-known measures such as setting heater thermostats to 68 degrees, sealing leaks, replacing heater filters once a month, or even replacing outmoded heaters with more efficient new models.

The California Public Utilities Commission will hold a hearing Thursday to discuss how to help low-income consumers who have trouble paying rising fuel bills.

Also, San Diego Gas & Electric Co. announced Tuesday that it is quadrupling its funding of a program to help financially pressed customers. The utility will give $4 to its Neighbor-to-Neighbor program, with a limit of $200,000, for every $1 a customer or employee gives. Those assisted will get a one-time credit of up to $200 on their bill. For more information, call (800) 411-7343.

The Associated Press contributed to this story.

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Copyright (c) 2005, North County Times, Escondido, Calif.

Distributed by Knight Ridder/Tribune Business News.

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SRE,

Source: North County Times

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