Gas heat bills to rise this winter, BGE says

Average bill for season could be $100 higher

October 03, 2002|By Dan Thanh Dang | Dan Thanh Dang,SUN STAFF

Natural gas customers in the Baltimore region will most likely see a $100 jump in their total home heating bill this winter because of a decline in production, rising prices and continuing talk of war against Iraq, Baltimore Gas and Electric Co. representatives told state regulators yesterday.

Customers in other parts of the state can also expect to see increases in their winter bills, representatives from other utilities said at the annual Retail Gas Market Conference held in Baltimore yesterday by the Maryland Public Service Commission.

Average bills for residential customers could rise by about $60 in the Washington suburbs and Southern Maryland, according to Washington Gas Energy Services Inc. An estimate was not available for customers living in Western Maryland, according to Columbia Gas of Maryland.

FOR THE RECORD - Because of an editing error, an article in yesterday's Business section incorrectly identified the natural gas utility that provides service to most Washington suburbs and Southern Maryland. It is Washington Gas. The Sun regrets the error.

Those figures are consistent with a U.S. Department of Energy winter outlook report released last month that also warned of significant price increases for customers this year because of higher demand and an expected economic recovery in the nation's power and industrial sectors.

"It's nowhere near what we saw two years ago," said Laurie H. Duhan, BGE's director of gas pricing and tariffs. "But we do expect the bills to be somewhat higher than before."

In the winter of 2000-2001, much of the nation endured utility bills that more than doubled because of colder-than-normal temperatures and soaring fuel costs. In Maryland, the PSC had to order gas and electric utilities in the state not to cut off service to low-income customers who were unable to keep up with rising gas prices and unable to get state energy assistance to help pay their bills because of computer glitches.

The threat of utility service shut-offs reached near-crisis conditions when the winter moratorium ended on March 31, 2001. More than 22,000 residential customers in BGE's territory were cut off that season, including about 2,000 low-income residents.

If forecasts are accurate, residents can expect higher natural gas prices than have been seen in more than a decade, with the exception of winter 2000-2001.

"The price curve has changed," said People's Counsel Michael J. Travieso, guardian of consumers' rights in utility matters. "You're going to have prices varying between $3 and $4, instead of between $2 and $3 [per decatherm, about 1,000 cubic feet of gas]. That's a 25 percent increase. There will be a significant increase in retail prices for consumers, not just during the winter season, but also throughout the year. And consumers will likely see bigger bills this year and probably the next few years."

To prepare customers, state regulators, the OPC and the three major gas utilities have started warning customers about the price increases this month through energy fairs, bill inserts and newsletters. Many are encouraging low-income customers to begin signing up for state assistance now.

Supplies are more than adequate this year, the utilities said, but weather could play a major role in prices. All three utilities said they are about 50 percent hedged for the winter with gas purchased during the summer when prices were lower.

"The prices could come down, but they don't seem to be," said Scott D. Phelps, director of gas procurement for Columbia Gas. "There's a lot of rumor of war. There's the impression that the economy will come back. The fact that we've had a couple weeks in a row of hurricanes. Drilling for gas has been shut off in some areas. A number of factors seem to be holding the prices up."

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