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12.5.07 Heating bills apt to hold Natural gas bills this winter are likely to be similar to last year's, local utility officials say, but that doesn't mean they will be cheap. The average Omaha-area homeowner who isn't on a level-payment plan probably can expect to pay $150 to $165 in January and February, based on current prices and normal weather. Gas bills for December could be in the $125 range. Utilities have locked in the rates they will charge customers for natural gas in December, and those prices are similar to what they were a year ago. Prices for January and February will be determined by market conditions. While wholesale prices compared with last year are stable, they are much higher than what natural gas used to cost. "If we look at the price trend, there's no question that in the last 10 years energy prices have moved up," said Alan Hersch, customer relations manager for Aquila Inc. Prices the past four years have been nearly double what they were in the early 1990s, Hersch said. Jim Knight, vice president of gas operations for Omaha's Metropolitan Utilities District, said a variety of factors affect price. The amount of natural gas in storage is at an all-time high, which means there are plenty of reserves heading into winter. Storage is up, in part, because a mild hurricane season has meant that production in the Gulf of Mexico hasn't been disrupted. Worldwide use of natural gas has been down because of mild global weather. That means there is more gas available to export to the United States. In addition, more natural gas is being produced in this country. Ultimately, though, winter temperatures will determine whether prices remain stable, drop or spike. The National Oceanic and Atmospheric Administration is projecting higher temperatures than normal, similar to last winter. If that happens, Knight said, gas prices could decline. In general, Knight said, prices are higher than they were in the 1990s because natural gas is more expensive to produce. Producers are drilling about three times as many wells, he said, to get the same amount of gas out of the ground. M.U.D. is offering the lowest prices of the state's three major gas utilities. Hersch attributed Aquila's higher prices to the fact that it is a private utility and must generate a return for shareholders, incorporate income taxes into its rates and pay more to borrow money than public utilities such as M.U.D. Aquila customers pay a different price for natural gas, depending on whether they live in the Omaha area, Lincoln or elsewhere in eastern Nebraska. The price variation, Hersch said, results from differences in transportation costs and the wholesale price that Aquila pays to buy the gas. Both Aquila and SourceGas, which provides gas to western Nebraska, offer their customers fixed-price options. SourceGas is the company that was formed when Kinder Morgan Inc. sold its Nebraska, Wyoming and Colorado gas distribution system. The SourceGas fixed-price option is the highest price being charged by a utility in Nebraska -- with the average running more than 50 percent above what M.U.D. charges. Len Mize, spokesman for SourceGas, said the company serves a smaller customer base over a larger area and so has much higher costs. Additionally, it has similar costs to Aquila as a private utility. Mize said SourceGas' rates have been evaluated and approved by the Nebraska Public Service Commission to make certain they're properly set. "It's not fair to compare our prices to the other utilities," he said. "That's why the commission looks at each company separately to give them a fair rate to recover their costs." |
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