• E-mail
• Print
• Comment
• Font Size
• Digg
• del.icio.us
• Discuss article

Dominion to Drop Gas Rate: Warm Feb. Prompts Utility to Revise GCR

Posted on: Thursday, 23 February 2006, 18:01 CST

By Betty Lin-Fisher, The Akron Beacon Journal, Ohio

Feb. 23--This warm February is bringing good news to Dominion East Ohio gas customers.

The utility said on Wednesday that it will reduce its gas rates another 11 percent, reflecting the mild weather in much of the country.

From March 8 through April 5, the Gas Cost Recovery (GCR) rate charged to people who have not chosen another supplier will be $11.07 per thousand cubic feet (mcf). The utility changes its rates monthly.

The utility had dropped its February GCR to $12.50/mcf, a 6 percent reduction from the previous month.

But don't go jumping for joy yet. Though natural gas prices have dropped, they're still much higher than last year.

March's rate is still 22 percent higher than a year ago, when it was $9.07/mcf.

The new rate will translate into an additional $40.14 per month for an average residential customer bill of $217.42.

Dominion spokesman Neil Durbin said the lower GCR reflects decreases in national market gas prices after warmer weather, which has allowed for increased storage of natural gas.

But natural gas prices are still volatile and weather sensitive. Prices are high because of the ongoing tight market supply-demand balance, high prices for petroleum products and the continuing disruption of some natural gas production in the Gulf of Mexico from last summer's hurricanes.

The change is only for people who buy gas directly from Dominion. People who have contracts with other suppliers under the Energy Choice program pay a different rate.

Forty-two percent of Dominion's 1.2 million customers pay the GCR. The other 58 percent have other contracts.

"Anytime rates go down, it's definitely good news for consumers, especially since rates are still much higher than they were last year," said Erin Biehl, spokeswoman for the Ohio consumers' counsel, the state's residential utility advocate.

But Biehl said consumers shouldn't be too quick to turn up their thermostats and should continue to be energy efficient.

"Even though rates are coming down each month, it could still mean higher bills if you're not energy efficient," she said.

Prices on the short-term energy markets have been coming down with the warmer weather, but that doesn't necessarily translate into equal reductions in gas rates from utilities or marketers, said Jeff Murphy, Dominion's director of pricing and regulatory affairs.

Dominion, which is a regulated utility, is not allowed to make a profit on its gas rate. But there are complicated formulas the utility uses to determine each month's rate, including the price Dominion expects to pay to buy gas in the upcoming month and the price it paid for its stored gas.

This year, the stored gas was more expensive than what Dominion is buying now on the open market, Murphy said.

Gas marketers in the Energy Choice plan who offer long-term contracts have to come up with a price based on long-term prices, which have not dropped as much as short-term prices, he said.

Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com

-----

Copyright (c) 2006, The Akron Beacon Journal, Ohio

Distributed by Knight Ridder/Tribune Business News.

For information on republishing this content, contact us at (800) 661-2511 (U.S.), (213) 237-4914 (worldwide), fax (213) 237-6515, or e-mail reprints@krtinfo.com.

Source: Akron Beacon Journal (Akron, Ohio)

More News in this Category