Residential Services | Gas | Water | Home | Contact Us |
 |
 |
|
10.2.08 Heating bills may be pleasant surprises Ready for some good news? Winter heating costs, which had been projected to increase significantly — as much as 15 to 20 percent — could drop below a year ago for some metro area residents. Metropolitan Utilities District this week projected that its prices this winter could fall 3 percent below last year, making them the lowest in four years. Black Hills Energy, formerly known as Aquila Inc., also has seen a reversal in prices. But its customers could still see a modest increase in prices. Consumers could get even better news with their bills if winter turns out, as projected, to be warmer than normal. "I would never have guessed in July, when we were talking about increases, that we would have seen the fall in natural gas prices that we've seen," said Scott Keep, senior vice president of operations for MUD. "I've never seen commodity markets move like they're moving now." Bob McKeon, spokesman for Black Hills, said its customers should not see the 20 percent spike forecast earlier this summer but could see a slight to 10 percent increase over last winter. MUD and Black Hills are two different types of utilities, which affects the rates they charge. MUD is public, and thus can buy some of its gas at below-market prices. Black Hills is private, and in addition to not getting a price break on gas, has to charge enough to pay a return to shareholders. Keep cautioned that the latest projections are just that, projections. Something still could happen — such as a colder than normal winter, a devastating hurricane or instability in oil-producing regions — to cause prices to shoot back up. Still, on Thursday, the Natural Gas Supply Association, in its supply forecast, projected prices to be flat. Market factors favor depressed prices this winter. Among them are: • The economy. A stagnant economy generally results in less overall energy demand as manufacturers curtail production. Despite the potential federal bailout, projections are for a slowing economy. Demand for natural gas is projected to increase slightly because of such things as ethanol production and electric power plants but not enough to push prices up significantly. • Production. New wells and improvements in technology are expected to boost production this winter to the highest levels since the early to mid-1970s. • Storage. The amount of gas in storage going into winter is relatively high, a factor that tends to reassure jittery markets. • Oil prices. Natural gas prices tend to parallel the price of oil. When crude oil hit its record highs in July, natural gas prices also reached abnormally high levels. That was about the time that utilities were projecting double-digit increases in heating bills this winter. Since then, the prices of oil and natural gas have retreated substantially. Last year, the average MUD customer spent about $555 on gas from December through March. This year, the latest projection is for that bill to be $508. Natural gas is the primary fuel used by Midlanders to heat homes. |
|
Media Relations: 402.504.7169