Natural gas rates going up this year
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Local consumers who heat their homes with natural gas can expect their heating bills for the next three months to be higher than they were a year ago.
Pittsburgh's three natural gas utilities filed notices with the Public Utility Commission yesterday about rate increases scheduled to take effect Monday. The biggest jump will be at Equitable Gas, where the gas cost recovery rate will be $11.81 per thousand cubic feet, up 18.3 percent from last year's $9.98. The average Equitable customer's monthly bill will be $134.40, compared to $119 a year ago.
Columbia Gas's new rate of $10.25 per mcf is 17 percent higher than the $8.76 customers paid last year, resulting in an average monthly bill of $120, said spokesman Matt Pitzarella. The average Columbia customer's bill a year ago was $107.
Dominion People's rate will be $9.67, an increase of 11.5 percent over last years $8.67. The average customer's monthly bill will be $104.60, a slight bump from last year's $101.
The quarterly filing with the PUC is designed to ensure the utilities comply with state law, which requires that they neither make nor lose money on the sale of natural gas, but pass on their cost for gas dollar for dollar.
The first day of the new gas rates is also the opening day for the Dollar Energy Fund's 2007-08 Hardship Program. Dollar Energy provides grants for utility assistance to low-income households statewide, funded by donor contributions and matching funds from utility companies.
While the new rates are higher than for the fourth quarter of 2006, they are lower than two years ago, when natural gas producers were doubly assaulted by Hurricanes Katrina and Wilma.
In the fourth quarter of 2005, natural gas prices reached record highs, with contracts on the New York Mercantile Exchange soaring above $15 per mcf. By contrast, November contracts for natural gas closed at $6.935 yesterday.
"I think what helps is having a mild hurricane season," said Joe Gregorini, manager of pricing and regulatory affairs at Dominion Peoples. While this year's hurricane season, which continues through Nov. 30, has seen two category 5 storms -- Dean and Felix -- "they really didn't affect the production areas," he said.
In the absence of major supply disruptions, natural gas inventory has grown, helping to suppress prices.
Indeed, the U.S. Department of Energy has reported growing inventories across the energy board -- in crude, gasoline and heating oil, as well as natural gas.
After peaking at a record $83.90 per barrel last week, crude oil retreated below $80 this week as investors took profits. But fresh buying, attributed by analysts to hedge funds, pushed prices back over the $80 mark -- heights from which they are bound to fall, analysts say.
Such high prices, more than $20 a barrel higher than a year ago, are depressing demand, said Tim Evans, an analyst at Citigroup Inc. in New York.
Stephen Schork, an analyst in Villanova, argued that many funds bought oil futures this week to pad their results for the third quarter. which ended yesterday.
"Hedge fund managers ... went window shopping in the [New York Mercantile Exchange crude] pit to dress up their end-of-quarter marks," Mr. Schork said in his daily Schork Report research note. "We are more interested to see how the fourth quarter begins on Monday rather than how the third quarter ends today."
"The people buying crude oil futures are buying them to sell them," Mr. Evans said, and that selling will inevitably depress prices.
When oil futures surged Thursday, gasoline and heating oil followed suit, adding more than 6 cents each. But yesterday, October gasoline contracts fell 2.39 cents to $2.07 a gallon. October heating oil fell .01 cent to $2.252 a gallon.
Meanwhile, at the pump, the average national price of a gallon of gas fell 0.6 cent overnight to $2.805 a gallon, according to AAA and the Oil Price Information Service. Yesterday's local price for regular unleaded was $2.829, said AAA.
Analysts have been predicting gas prices will add 10 to 15 cents a gallon to catch up to the increase in oil prices, but so far the increases have been slight.
First Published September 29, 2007 12:00 am
