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Natural Gas Prices Expected to Sharply Increase Heating Costs

Posted on: Wednesday, 12 October 2005, 18:00 CDT

By Linda S. Morris, The Macon Telegraph, Ga.

Oct. 12--Predictions of soaring natural gas prices this winter led Patrick O'Neill to take drastic measures.

"I changed my entire house over from gas to electric -- the water heater, the stove and the furnace -- about a month ago," O'Neill said.

O'Neill, a Macon plumber, said he was prompted to make the changes because he noticed natural gas prices going up last year. Then he started hearing the warnings that prices would jump even higher this year.

"I'm just taking my chances with electricity, I guess," said O'Neill, who was able to handle the gas-to-electric conversion himself.

By almost every account, O'Neill has a right to be worried about energy prices.

The Georgia Public Service Commission said Tuesday the average customer is likely to experience about a 10 percent increase in electric bills and about a 50 percent increase in natural gas bills this winter.

If that prediction holds, a $100 gas bill last year could increase to $150 this year.

Natural gas is the most popular of all home heating fuels, with 52 percent of American homes heated with it, according to the American Gas Association.

Thirty-one percent of homes heat with electricity, while 9 percent use fuel oil, 6 percent use propane and 2 percent use wood, kerosene or other fuel, according to the association.

Winter weather conditions will be the biggest factor in determining how high and how long natural gas prices will be up, said Roger Cooper, the association's executive vice president.

Despite supply disruptions from hurricanes Katrina and Rita, association officials said there should be adequate natural gas supplies in storage.

Joseph Monroe, vice president of external affairs for Georgia Natural Gas, said the industry's ability to produce enough fuel to meet demands was near capacity when this year's hurricanes blew through the Gulf Coast, disrupting fuel production. Georgia Natural Gas is one of 10 gas marketers in Georgia.

"The energy infrastructure is fractured," Monroe said. "The situation is evolving. I suspect it will be a prolonged situation before we see (prices) coming down. If we don't have any further interruption ... I hope it won't go much higher."

Simone McKinney, media and community relations manager with Scana Energy, another natural gas marketer in Georgia, expressed similar concerns about natural gas prices.

"Throughout the United States, wholesale prices are going up," McKinney said. "Even before (the hurricanes), the increase in global demand pushed prices up as well."

Macon resident Allison Young was surprised to hear her family's heating bill may increase by 50 percent this winter.

"That's awful," Young said. "There's nothing we can do about it because we have to have heat, and we want to be comfortable in our homes. But that's just awful."

Young said her family of four has tried to be conscious about heating and air-conditioning costs in their home. This year, they replaced their windows and doors to a more efficient style.

"When we're not home, we always adjust the thermostat," she said. "We never leave the house without doing that, especially for trips. We will continue to do that. We may even keep it down a little bit lower this winter."

While she and her husband often disagree about the thermostat setting, it usually averages about 73 degrees, she said.

The Georgia PSC recommends residents set their thermostats at 55 degrees at night during the winter months.

"My husband will want to try (the PSC recommendation) at least once," Young said. "Of course, we may not make it through the night. That's pretty extreme."

Georgia residents have 10 natural gas marketers to choose from, and the prices charged can vary as much as $10 a month, depending on the basic rate, service fees and other costs.

Most marketers offer a variety of plans, such as variable rate plans, which could change each month, and fixed rate plans that have rates that stay the same for a certain period of time, such as six months or a year.

However, a fixed-rate plan does not mean the monthly bill will stay the same. Under this plan, marketers charge a set rate for each therm, or unit of heat energy, actually used by customers. The bill will fluctuate each month depending on how much natural gas is used.

Natural gas providers also offer special rates for senior citizens and low-income customers.

The marketers do not have to get approval from the Public Service Commission before they set their rates, but they have to submit their rates to the commission by the fifth of each month. They cannot change their rates without notifying the commission, said Deborah Flannagan, executive director of the commission.

"They buy it for whatever they can get the gas for, and they set the customer service rates," Flannagan said. "As wholesale prices go up, marketers will go up on price."

Customers can use a variety of criteria when trying to decide which company to get their gas from, she said. They can log onto the Public Service Commission's Web site at www.psc.state.ga.us [http://www.psc.state.ga.us] and check for complaints filed against gas providers and compare prices, she said.

"But also just go by your initial reaction, if they give you good customer service ... or if they are surly," Flannagan said. "Sometimes, it's not always looking for the cheapest price."

She said she was not surprised to hear about people changing from gas heating or appliances to electric, but they will have to determine if the cost to switch is worth it.

O'Neill, who converted his whole house to electric appliances, said changing out a 40-gallon natural gas-powered water heater to the same size electric-powered water heater would cost about $1,000, including the cost of the unit, labor and supplies, depending on the location of the water heater.

Flannagan said there's no guarantee natural gas prices are going down anytime soon.

"Historically, natural gas was a lot cheaper than it is now," she said. "We will not see the extremely low prices of natural gas in many, many years, if ever."

The Associated Press contributed to this report. To contact Linda S. Morris, call 744-4223 or e-mail lmorris@macontel.com [mailto:lmorris@macontel.com].

NATURAL GAS MARKETERS IN GEORGIA:

--Commerce Energy (877) 226-5389 www.commerceenergy.com

--Coweta-Fayette EMC Natural Gas (877) 746-4362 www.cfemcnaturalgas.com

--GasKey (877) 427-1539 www.gaskey.com

--Georgia Natural Gas (877) 850-6200 www.georgianaturalgas.com

--Infinite Energy Inc. (877) 342-5434 www.infiniteenergy.com

--Scana Energy (877) 467-2262 www.goscana.com

--Shell Energy Services Co. (877) 677-4355 www.shellenergy.com

--Southern Company Gas (866) 762-6427 www.southerncompanygas.com

--Vectren Source (866) 200-5693 www.vectrensource.com

Walton EMC Natural Gas (866) 936-2427 www.waltonemcgas.com

TIPS FOR SAVING ENERGY, MONEY:

--Stop leaks. Many leaks around poorly fitting windows and doors have the same effect as leaving a door standing open.

--Weather strip around all exterior doors and openings.

--Cover the openings of unused fireplaces.

--Open draperies and shades in sunny windows on cold days. Keep them closed at night to prevent heat from escaping.

--Lower the thermostat to 55 degrees at night during the winter or when you will be away. Heat pump owners may achieve greater savings by keeping the thermostat at 70 degrees unless an extended absence from home is planned.

--Clean or replace filters once a month during heating season.

--Consider the advantages of a clock thermostat for the heating and air-conditioning system.

--Set the thermostat on the water heater to a lower temperature.

--Add insulation around the water heater, making sure not to block needed air vents for gas and oil heaters.

--Insulate hot water pipes.

--Use long-life, lower wattage light bulbs.

--Use the dishwasher only when full.

--Limit the number of times the refrigerator door is opened.

--Golden rule: If you are not using it, turn it off.

SOURCE: Georgia Public Service Commission

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To see more of The Macon Telegraph, or to subscribe to the newspaper, go to http://www.macon.com

Copyright (c) 2005, The Macon Telegraph, Ga.

Distributed by Knight Ridder/Tribune Business News.

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EGR, VVC,

Source: The Macon Telegraph (Macon, Ga.)

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