Heating bills staying on track - so far

Milder weather overall eases the impact of higher oil and natural gas prices

January 16, 2004|By Lorraine Mirabella | Lorraine Mirabella,SUN STAFF

The weather outside may be frightful, but heating bills aren't giving Maryland residents the chills - yet.

Apart from a couple of severe cold snaps, the 2003-2004 heating season has been remarkably warm.

Baltimore's cumulative total of degree days - an arcane measurement used by fuel companies and weather forecasters to assess the costs of cold weather - is well below normal, and that's good news for consumers.

It means that even with higher prices for fuel oil and natural gas on the wholesale market, consumption is down, so heating bills haven't been soaring.

But all of that could change with a prolonged cold snap.

"One day's freeze will affect the market but will have little effect on the consumer," said Neil Gamson, an energy analyst in the Energy Information Administration of the U.S. Department of Energy.

"But if [the cold weather] is prolonged more than several days, there will be a lot of gas consumption, then storage will dip, and that will drive up prices," Gamson said.

The department is predicting that the price of natural gas used for heating homes could rise 8 percent, on average, compared with last winter.

But because temperatures have been milder than normal this year, Baltimore Gas and Electric Co. said, it expects the typical home heating customer to pay an average of $578 for heat over the five-month season, a drop from the average $592 the typical resident paid last winter.

Last year's heating costs were higher than normal because the winter temperatures were 13 percent colder than normal, said Laurie Duhan, BGE's director of gas pricing and tariffs.

"This year the market price of gas has gone up, [reflected in a 20 percent to 25 percent increase in the commodity on bills] but the use is so far down from last year," Duhan said, who said November and December were 4 percent milder than normal.

Washington Gas also said it expects lower heating costs for its customers and is forecasting an 8 percent decrease based on projections for normal winter temperatures.

"In spite of the colder temperatures that we're currently experiencing, the projections are still for the overall season that a normal winter temperature range will yield winter utility bills below the previous season, though that will vary from customer to customer," said Tim Sargeant, a spokesman for the gas company that serves about 400,000 residents in Montgomery, Prince George's, Calvert, Frederick, Charles and St. Mary's counties.

Mark Stultz, a spokesman for the Natural Gas Supply Association, said that spikes in wholesale spot prices may or may not affect retail customers, depending on the supplies that utilities lock in going into the season.

"Usually the utilities come up with a portfolio of different suppliers at different prices to try to insulate retail customers from the volatility in the wholesale market," Stultz said.

Wholesale prices have risen from slightly less than $5 per million Btu in January last year to $6.03 yesterday.

Users of heating oil should see lower bills on average this winter compared with last year, with costs down on average 4 percent, the Energy Department says.

Despite higher prices per gallon of oil, consumption is expected to be down from last year, Gamson said.

Average crude-oil prices for the winter are expected to be 19 cents higher than last winter's average, at $31.35 per barrel.

Over the past few weeks, however, crude oil prices have been higher than expected, hovering in the range of $34 a barrel, rather than the expected $32 a barrel, as temperatures have dipped and crude-oil inventories have remained low.

Oil prices increase

That means consumers are paying more for oil since the start of the season. The Energy Information Administration said heating oil averaged $1.56 per gallon for the week ending Jan. 12, a gain of 6.2 cents from the previous week.

Because of the rising wholesale prices, prices have risen an average 9 percent since the beginning of the season at C. Hoffberger & Co., a mid-sized, Baltimore-based oil company.

With more freezing weather yesterday, consumers continued running out of heating oil, and fuel oil companies scrambled to keep up with the increased demand and fix broken furnaces.

Calls up since weekend

Hoffberger started getting an increase in calls for repairs and oil deliveries after freezing temperatures hit the Baltimore region last weekend, including many calls after oil lines froze and cut off heat to the homes.

"It hasn't been this cold in a long time," said Heloise Bell, an administrator for the company.

"We're swamped with service calls," said Patricia Date, a manager at Rittenhouse Fuel Co. in Towson. "The furnaces are working hard, so whatever is going to happen is going to happen at the peak time when you're forcing the furnace to work harder than normal."

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