Get set to pay more for natural gas, too

Enlarge

The price of natural gas will hit a record high next month, putting more pressure on consumers already contending with higher food and gasoline costs.

The increase isn't a huge problem in July: The average bill next month for Columbia Gas of Ohio customers is expected to be $33.58, up from the $29.08 customers paid a year ago.

However, winter is a different story, and analysts have been predicting in recent months that natural-gas users could see heating bills spike as much as 50 percent this winter based on recent trading levels.

Next month, natural gas will cost $1.43 per 100 cubic feet, up 43 percent from a dollar in July of last year.

The state already is starting to prepare for the prospect that more customers will not be able to pay their bills when winter arrives.

Based on new rates next month and average usage from last winter, the average Columbia bill would spike to $275 in January, up $62 from earlier this year. Average bills would go even higher if natural-gas costs continue to rise, as some are predicting.

The Public Utilities Commission of Ohio is expected to issue new rules in the coming weeks on when and how companies can shut off service to a customer, said Janine L. Migden-Ostrander, Ohio consumers' counsel.

The commission also may consider changing rules to make it easier to get help from assistance programs.

"All the major gas and electric companies are filing for rate increases and for billions to improve their infrastructure," Migden-Ostrander said. "This is creating a real concern about how folks are going to be able to continue to afford to have energy services."

Natural gas has been trading in a range not reached since hurricanes Katrina and Rita destroyed oil and natural-gas rigs in 2005.

Supply and demand is partly responsible for pushing up the price of natural gas, but there also are other factors, such as investor interest in commodity markets and a low level of gas storage for this time of year, analysts said.

"The supply of natural gas is not increasing at the same pace as the demand is," said Ken Stammen, Columbia Gas spokesman.

A severe winter, like the one that just passed, also contributes to high natural-gas prices. But the weather concerns are year-round.

Stammen said summer weather affects gas prices in several ways. For example, a hot summer boosts demand for electricity, and providers often generate that power using natural-gas-fired plants.

Brian Milne, refined-fuels editor at DTN, a market-information company based in Omaha, Neb., said the low levels of stored gas probably means the run-up in prices will continue.

"You go into the key winter months with lower supply and less of a cushion," he said.

Last week, the federal Energy Information Administration reported that storage levels were up slightly from the week before, but down 15 percent from a year ago and down 1 percent from the five-year average.

"The gas that we and other utilities are putting in the ground for storage is a lot more expensive than what we were buying last year," Stammen said.

tturner@dispatch.com

dgearino@dispatch.com