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Gas Heat Bills May Drop If N.C. OKs Proposal: Companies Ask to Cut Rates After Wholesale Prices Fall

Posted on: Saturday, 31 December 2005, 12:00 CST

By Andrew Shain, The Charlotte Observer, N.C., The Charlotte Observer, N.C.

Dec. 31--After months of record prices, natural gas bills should fall next month for Charlotte-area residents.

The area's two dominant natural gas utilities, Piedmont Natural Gas and PSNC Energy, have asked N.C. regulators to drop the companies' rates about 11 percent following a steep fall in wholesale prices in the past two weeks.

Customers would save an average of $21 to $23 a month during the winter heating season that runs through March, compared with current rates.

Even with the decrease, utility rates remain more than 60 percent higher than a year ago. Customers will still spend an average of about $200 more the remainder of this winter season.

Piedmont and PSNC are adjusting the portion of rates tied to wholesale prices, which make up about two-thirds of monthly bills.

Natural gas wholesale prices this year broke records when two hurricanes in the energy-rich Gulf of Mexico disrupted production and curbed already tight supplies. Wholesale prices have more than doubled this year.

But wholesale prices have fallen more than 25 percent since Dec. 13. Some experts credited recent forecasts for a warmer-than-usual winter. Aubrey Hilliard, president of Charlotte trading firm Texican Horizon Energy, said traders who have profited from unusually high futures markets all year are cashing in before the new year.

The N.C. Utilities Commission will consider the rate-drop requests from Piedmont and PSNC on Tuesday. If approved, which is expected, the new rates would date back to Sunday, Jan. 1.

Piedmont and PSNC boosted rates three times since late summer to anticipate normal winter weather and tight supplies.

Even with the requested rate drop, the utilities urged customers to keep conserving gas in case the winter turns colder.

Andrew Shain: (704) 358-5164; ashain@charlotteobserver.com

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Copyright (c) 2005, The Charlotte Observer, N.C.

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Source: The Charlotte Observer (Charlotte, N.C.)

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