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Published: Wednesday, 10/7/2009

Gas customers' heating bills expected to drop this winter

BY LARRY P. VELLEQUETTE
BLADE BUSINESS WRITER
Conservation efforts, such as these high-efficiency heating and cooling units, have played a role in decreasing the demand for natural gas. Conservation efforts, such as these high-efficiency heating and cooling units, have played a role in decreasing the demand for natural gas.
CRAIG RUTTLE / AP Enlarge

Those who heat with natural gas are expected to catch a break this winter as record supplies push prices down, potentially saving consumers hundreds of dollars on utility bills in the months ahead.

Local energy providers and the U.S. Energy Information Agency have released preliminary estimates of energy prices for the upcoming heating season, each suggesting increased supplies and falling demand will significantly impact heating prices.

The federal agency estimates that residents heating with natural gas in the Midwest - where more than 70 percent of houses rely on the fuel - will get a 15 percent decrease in average energy bills this winter.

The drop is the result of an 11 percent decrease in natural gas prices, and an expected 4 percent decrease in usage based on a forecast of warmer temperatures than last winter.

Closer to home, however, savings could be even greater.

Michigan Gas Utilities, which provides natural gas to consumers north of the state line, announced yesterday that it expects bills to be about 20 percent lower this winter than last, saving consumers an average of $225.

"Natural gas prices started

dropping last spring and that continued through the summer," said Paul Livernois, external affairs manager for Michigan Gas. "Right now we have a great supply of natural gas that is keeping the prices that we pass along to customers lower than last year."

Chris Kozak, a spokesman for Columbia Gas of Ohio, which serves tens of thousands of people in northwest Ohio, said the utility expects bills to be significantly lower.

"We don't have projections, but we have some good indicators," he said. "We have a record amount of storage, gas prices are at a 10-year low, we had a mild summer and a nonexistent hurricane season. Right now, indicators look pretty good."

The utility's October rate is 49 cents per 100 cubic feet, or about half what it was a year ago. Its rate is reset each month.

Mark Frye, an energy consultant with Palmer Energy Inc., Toledo, said that the economy may make it harder for consumers to pay their utility bills this winter, but those bills will be lower because of falling demand.

"The economy has had an impact on natural gas demand, particularly in industrial segments," as closed or slowed plants use less energy, increasing supply to other sectors, he said.

Conservation efforts, such as increasing home insulation and switching to energy-efficient appliances, have also played a role in slowing natural gas usage.

Natural gas prices are at their lowest point in a decade also because new exploration techniques have allowed energy companies to unlock "very large, very significant" natural gas reserves in shale fields, particularly in Pennsylvania, eastern Ohio, and parts of Appalachia.

Natural gas inventories have already hit an all-time high and are expected to remain at record levels Nov. 1, which is the start of the U.S. heating season, according to the American Gas Association.

Utilities built up those stocks throughout the year with gas that was much cheaper than in 2008.

Despite the falling prices however, there are still significant numbers of consumers who are expected to have difficulty paying their winter heating bills.

Columbia Gas' Mr. Kozak said the utility has received a large number of calls this fall from customers seeking assistance.

"We're running into a lot of people who are calling us to let us know that they don't have the means to pay their bills," he said. "It's not a high bill issue; it's that they lost their job, or their spouse lost their job."

Customers are advised to contact the utility if they are having problems paying a bill.

Contact Larry P. Vellequette at:

lvellequette@theblade.com

or 419-724-6091.



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