Enter Keywords Indiana Governor Asks Natural Gas Utilities to Cap Costs This Winter Source: Knight Ridder/Tribune Business News Publication date: 2000-08-31

Aug. 31--With Indiana's natural gas customers facing a 50 percent price increase over the next year, Gov. Frank O'Bannon on Wednesday urged the utilities to cap costs this winter and recoup the money later. The anticipated rate increase is based on a normal winter and could mean residential customers will see their bills jump by $50 or more per month during the winter heating season, when gas demand is heaviest.

It was news jolting enough to put winter weather on the minds of people suffering through a sweltering August afternoon.

"I don't cook at home. I take baths and I do my laundry, and my bill is already $40. I can't imagine what it will be in the wintertime," said Susan Tisdale of Indianapolis. "It's really going to hit us hard." She is a single working woman and a part-time student.

O'Bannon met privately Wednesday with representatives of four gas utilities, including three of the largest: Citizens Gas & Coke Utility of Indianapolis, Evansville-based Vectren and NiSource of Hammond. Also present was a smaller utility, Midwest Natural Gas Co., which serves part of southern Indiana. The gathering preceded an Indiana Utility Regulatory Commission meeting where the utilities explained why and how much natural gas prices might rise.

The bottom line, they said, was that demand is up for natural gas, while supplies are down.

The governor followed up his meeting with a letter to the companies in which he urged them to put off rate hikes during the winter months and try to recover those costs when consumers won't feel the pinch so severely.

The idea of deferring the natural gas price increases "causes me concerns and problems," said David Griffiths, president and chief executive of Citizens Gas. "The reality is the reality. We can't negotiate the impacts. These are expenses that going to have to be paid."

He suggested the firms expand programs that provide financial help for low-income customers. And he urged the utilities to get customers signed up for "budget billing" plans that allow them to spread out costs over the year.

O'Bannon, who was not available to discuss the letter, urged the utilities to meet with Anne Becker, the Indiana utility consumer counselor, to work out an agreement to protect consumers from the expected price increases.

The governor's office is considering invoking a state law that allows him to suspend the sales tax on energy in certain emergencies. O'Bannon recently used the law to suspend the sales tax on gasoline; that suspension expires Sept. 15.

At the regulatory commission meeting, the executives didn't mention their meeting with O'Bannon.

They told the commission members that natural gas prices are rising because demand increased and production fell during much of 1999. While natural gas exploration efforts have been revived because of the higher prices, that's not expected to ease consumer costs before mid-2001.

The utilities said they're trying to tell consumers about alternatives, such as budget pricing. Generally, most customers don't opt for such plans. In Vectren's case, for example, about 20 percent of its Indiana Gas customers are signed up, and only 4 percent of its Southern Indiana Gas and Electric Co. customers use the program.

Utilities warned that customers are only beginning to focus on the issue. "This change is going to be dramatic, and it is going to be relatively sudden," Griffiths said.

Consumers agreed.

Camm Harness, a painter from Indianapolis, said he's certain that if the high costs don't eventually come down, the rent for his North Meridian Street apartment will increase.

"If you were a landlord, would you eat that price crunch? I wouldn't," Harness said. "Everyone else has to pay it. If they have to pay more, you have to pay more."

Like Harness, many Hoosiers flinched at the idea of a hefty rate increase.

"Ho-ly! That's sad, because we have an electric bill, too," said Shala Rheinheimer, a 22-year-old student at the Herron School of Art. "It's ridiculous. I'm a student. I can't afford that. We're really going to have to put more money aside for our gas bills. We'll make it, but it's going to be hard."

By Bill Koenig and Kristina Buchthal

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-- Martin Thompson (mthom1927@aol.com), September 01, 2000