Gas heat price estimated to rise 53% this winter: Typical homeowner's seasonal bill could go from $976 to $1,495

Lexington Herald-Leader
October 3, 2005
By Karla Ward

If the winter wind doesn't blow you over, your heating bill might.

Natural gas prices in Kentucky could jump 53 percent or more this winter; for many consumers, the first effects of this might be felt from the 30 percent rate increase that Columbia Gas of Kentucky requested on Friday.

"If industry predictions come true, prices could be at unprecedented levels," said Lisa Smith, communications manager at Columbia Gas. "We're concerned about folks being able to pay their bills and keep their houses warm."

Prices across the nation already are climbing higher.

If the Kentucky Public Service Commission approves Columbia Gas' rate increase request, the price of natural gas would go from the current $9.40 per thousand cubic feet (Mcf) to $12.31 per Mcf effective Oct. 27. That doesn't include delivery charges.

Louisville Gas & Electric Co. also announced that it plans to raise rates about 64 percent. If the PSC approves the increase, a customer whose bill was $87.85 last November would pay $143.96 beginning Nov. 1.

Natural gas for delivery in November hit a record high of $14.196 per Mcf Thursday. That's more than three times its average price over the past five years, $4.70 per Mcf.

Companies such as Columbia Gas and Delta Natural Gas Co. do not profit from the rising prices though, company representatives said.

Smith said the gas bill is divided into two parts: the company's delivery charge (where it makes its money) and the cost of the gas (passed on to the customer at the same prices Columbia and Delta pay).

"We absolutely hate when prices are this high," Smith said. "We want people to be prepared."

Higher bills in store.

Natural gas cost consumers in Kentucky, Tennessee, Mississippi and Alabama an average of $12.20 per Mcf during the final quarter of 2004 and the first quarter of 2005, according to the Energy Information Administration.

During the comparable quarters this winter, the administration estimates that the same amount of fuel will cost an average of $18.69, a 53 percent jump.

The typical customer who uses natural gas to heat a home might consume about 80 Mcf per winter, said Bob Hazelrigg, manager of external affairs for Delta Natural Gas.

That would mean the cost of natural gas to heat a home could jump from about $976 last winter to about $1,495 this winter, although those figures will vary depending on several factors, including the energy-efficiency of the home.

"If you live in a brand-new house and you have high-efficiency appliances, you're going to have a much better winter than someone in an older home with outdated appliances," Smith said.

But for those for whom a new house isn't an option, there are some simpler things people can do to lessen the bite. "The more that folks do now," Smith said, "the better off they'll be."

She and Hazelrigg suggest that customers sign up for the budget plans offered at Columbia and Delta, which spread the higher cost of winter heating over the whole year. The companies use a formula to estimate how much gas the household will use, then average it so that the customer pays an equal amount every month, with a periodic larger or smaller payment as estimated costs are reconciled against actual costs.

"It costs nothing to participate," Smith said. "It really does ease the burden."

Choosing your supplier.

Columbia customers also have the option of the Customer Choice program, which allows them to buy gas from an outside supplier at a price that is locked in for one to three years. Columbia still delivers the gas and handles the billing.

By locking in one price, customers protect themselves from rising prices. But on the downside, if prices drop, they'll be paying more than their neighbors for natural gas for months on end.

"It is a risk when a customer locks in a price," said Jeffrey Mayer, CEO of MXenergy, one of two companies that customers can contract with through the Customer Choice program.

His company supplies gas to 3,900 of Columbia Gas' Kentucky customers.

Hazelrigg said natural gas users should turn their thermostats down if they leave the house for a while.

Smith also suggested that customers pay attention to how much hot water they're using; make sure their heat registers are not blocked by furniture, draperies or other items; and ensure that their homes are properly weatherized.

"Insulation is a huge one," she said. "That's very, very important."

Customers who anticipate that they might have trouble paying an energy bill should call the company as soon as they anticipate a problem, rather than waiting until they're so far behind that their service is about to be cut off, Smith said.

Columbia Gas has 145,000 customers in 33 Central and Eastern Kentucky counties, and Delta has about 40,000 customers in 23 Central and Southeastern Kentucky counties.

Insulate against high costs Practical, inexpensive tips for making your home more efficient.

Good for business.

Stock is up at NGAS Resources, a Lexington company that explores for oil and natural gas.

Stretching aid for the poor.

Money to help low-income families isn't keeping pace with the cost of energy.

Representatives from Columbia Gas of Kentucky will be at Lowe's on Richmond Road from 1 to 4 p.m. Saturday to answer questions and provide information to customers interested in weatherizing their homes.

To sign up for Columbia's budget plan or for other assistance, call 1-800-432-9345.