Gas customers feel the

Published 12:00 am Sunday, January 7, 2001

heat from the cold weather


Staff Writer

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Gas customers in Pike County have felt the cold weather, not only in their fingers and toes, but in their wallets, as well.

Freezing temperatures have forced the rising cost of natural gas even higher.

This past September, Jim Smith, general manager of the Southeast Alabama Gas District, announced he was giving customers "ample warning" that the cost of natural gas has been rising since the year before and they would likely face higher home heating bills this winter.

Smith explained the market prices for natural gas rose during the summer, along with prices for gasoline, oil, electricity and other energy sources.

At that time, local gas systems were expecting price increases of 20 to 40 percent.

They were not far from the mark.

According to Shannon Gooden, marketing manager for Southeast Alabama Gas District, rate increases in January went up 5.3 cents per hundred cubic feet. Overall, the gas district has seen a 54 percent increase since this time last year.

"If someone paid $100 last year, they can expect to pay $150 this year," Gooden said as an example.

There are three main reasons for the increases in natural gas bills: An increase in demand for all forms of energy, natural gas is both inexpensive and environmentally friendly plus used more to generate electrical power and summer usage decreased storage stocks forcing market prices to rise.

Complicating the supply and demand picture is the fact that temperatures have been milder than normal for the last three winters and this unusually cold weather is bringing the difference to light.

"We hate we’re having to pass these increases on to the customer," Gooden said, adding the publicly-owned utility does "shop for the best price" since it purchases gas from multiple providers.

Although the Southeast Alabama Gas District is having to pass on these increases to customers, private companies are costing more.

For example, Alagasco is predicting a 62 percent increase in heating bills, which is twice as much as what was originally expected. With the rate hike, the average residential bill for a year will be $1,025, compared to $865 annually under the old price.

Nationally, the U.S. Department of Energy had predicted a 40 percent increase in natural gas prices.

Smith said the District expects gas prices to ease in time, but that time will not be until after winter.

There are several things consumers can do to reduce the impact, such as weatherizing their home, making sure doors and windows are insulated, close vents in unused rooms, set thermostats at a lower temperature during the day, keep curtains and shades open to allow sunlight in during the day, insulate pipes around the water heater and use child safety plugs in outlets on outside walls.

Gooden said gas customers are not the only ones feeling the impact because other fuel commodities were lacking in production because of mild winters in the past few years.

She said the Southeast Alabama Gas District is not benefitting from the price increases.

"If we see a decrease in our costs, we will pass that along to our customers," Gooden said.

During the summer, the Southeast Alabama Gas District raised its rates by 16 cents per hundred cubic feet because of the increased prices the utility company was paying.

The District purchases gas on a "hedging" system, which means it can decrease the price it pays if the price of gas goes down. It buys gas supplies over a period of time and, if it wasn’t for hedging, it would be locked into the price.