Cold may offset heating price drop jay.hancock@baltsun.com

ECONOMIC NAVIGATION AND SIGHTSEEING

December 07, 2008|By JAY HANCOCK | JAY HANCOCK,jay.hancock@baltsun.com

The "commodity" price for Baltimore Gas & Electric's 600,000 household natural gas customers popped up a bit for December, rising from 96 cents per therm last month to $1.05 per therm. The federal Energy Information Administration blames unseasonably cold weather in much of the country for increased demand and higher prices.

But BGE's price is still far below its level of a few months ago and below offers from independent suppliers. BGE Home, a lesser-regulated company owned by BGE parent Constellation Energy, has been trying to sell households on a fixed-price gas contract of $1.599 for the winter.

The commodity cost is based on the wholesale market and doesn't include delivery and other stuff. The wholesale price for natural gas has plunged by half since the summer. That's not as much as the decline in oil and gasoline, but it's still a huge break for consumers.

It might not feel like one, however, because households weren't using much gas during the warm months. BGE's default price is still higher than the 96 cents from December 2007. That's partly because BGE bought some of its gas a few months ago, when prices were high.

If the economy continues to struggle, as it probably will, natural gas prices could fall even more. That could be offset, however, by an especially cold winter.

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