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Georgia Natural-Gas Customers Will Get Price Break in November

Posted on: Tuesday, 8 November 2005, 18:00 CST

By Margaret Newkirk, The Atlanta Journal-Constitution

Nov. 8--Mild fall weather and competition will help give Georgia natural gas customers a reprieve this month.

November prices for variable-rate home heating plans are down 14.27 percent from last month, although they remain substantially higher than they were before back-to-back hurricanes hit the natural-gas-rich Gulf Coast earlier this year.

Gas marketers' prices for November were posted on the Public Service Commission's Web site Monday.

Fixed-rate plans were down slightly, too, although customers who lock in now are still locking in at hurricane-bloated rates.

Part of the reprieve appears to spring from marketers' attempts to steal each other's customers. Some of Georgia's largest marketers are offering promotional pricing for new clients.

But the main driver is the wholesale market, and the market that serves Georgia in particular.

Wholesale prices have dropped a lot because of milder-than-average weather and other factors.

"The market is coming down right now," said Paul Hyland, a buyer for the two electric membership cooperatives that sell natural gas in Georgia. "We're not seeing a lot of demand."

Wholesale prices are tracked by the federal Energy Information Administration.

The EIA reported sharp drops in wholesale prices that began nearly two weeks ago.

Between Oct. 26 and Nov. 2, wholesale prices dropped 26 percent on average across the country.

Part of that drop happened during the time when Georgia marketers were setting this month's retail prices.

The drop included both current prices and future prices -- a sign that buyers and speculators had lowered their price expectations for the winter months.

At the Henry Hub, futures prices dropped an average of 17 percent.

The pipelines that make up the Henry Hub, outside New Orleans, are the major source of natural gas in the Southeast.

The EIA credited moderate temperatures, the gradual restoration of hurricane-damaged production facilities in the Gulf and relatively healthy supplies of stored gas for the winter.

Prices remain much higher than last year, though -- with the highest jump in the areas that rely on the Henry Hub. Across the country, wholesale natural gas prices are running 10 percent to 58 percent higher than last year, according to the EIA: The 58 percent jump is at the Henry Hub.

Prices could turn north again quickly, and likely will, said Hyland, "as soon as the first cold snap hits."

Hyland said he and other buyers are watching weather predictions, which now call for about 10 more days of milder-than-normal fall weather.

"They're saying that after that, there's a cool snap coming," he said. "But that could just be people trying to get a little height in the market."

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Copyright (c) 2005, The Atlanta Journal-Constitution

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Source: The Atlanta Journal and Constitution

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