PSC takes consumers along for a gamble on natural gas

The Public Service Commission just made a big bet on natural gas, overruling consumer advocates and its own staff, by ordering utilities to buy much of next winter's gas at today's cost rather than waiting for prices to possibly fall even further.

Natural gas prices have plunged along with all energy costs. PSC staff, the Office of People's Counsel and Maryland utilities all wanted to buy gas as usual, filling pipes month by month between now and October and paying the spot price each time. Locking in now, they argued, would prevent utilities "from buying at even lower prices in the months to come," according to a PSC order filed Tuesday.

But the commissioners, having witnessed last summer's natural-gas spike, ordered BGE and other utilities to lock in 40 percent of next winter's needs at today's price. Consumers will still save a ton compared with this winter's cost, they said, and they'll be partly protected if another hurricane disrupts supplies this summer and fall.

It may backfire. Wholesale gas prices have plunged 60 percent from last summer and are 15 percent under their average for the last five years. But if the recession deepens they'll have even further to fall.