Snuggle up: heating bills may rocket By BEN SPIESS Scripps-McClatchy Western Service September 17, 2000

ANCHORAGE, Alaska - Along with the cold, Alaskans in Southcentral should brace for rising fuel bills this winter.

The forecast: a 20 to 25 percent hike in gas bills starting Jan. 1.

More than 90 percent of Anchorage homes heat with natural gas. The home customer's gas bill will likely average $823 next year, up $160.

Enstar vice president Dan Dieckgraeff cautioned that estimates on the rate changes are preliminary and will be reviewed by utility regulators.

For Alaskans, big heating bills are one of the few clouds in the huge silver lining of high energy prices.

With oil prices high, the state is taking in more than $5 million a day in oil taxes and royalties. For only the third time in a decade the state may balance its budget. For the first time in years, the owner companies such as BP, Exxon and Phillips are talking seriously about building a natural gas pipeline to sell the North Slope's gas reserves. A gas export project would generate hundreds of millions of dollars in state revenue.

But Alaskans are also buyers of the state's oil and gas riches. Big energy consumers are counting on a costly winter.

Larry Petersen, with Anchorage's facility maintenance division, said the city spends $1.9 million to heat its buildings now. A rise in gas prices would likely mean hundreds of thousands of dollars more in costs. The annual gas bill for the Loussac Library, where the city Assembly meets, is about $35,000. The expected additional cost of keeping Assembly members warm: $8,750.

With a proposal to cap taxes at 1 percent of assessed value, Petersen audibly groaned on news of the gas hike: "We don't need this now," he said.

Mike Barry, Dimond Center general manager, says that energy can be the highest operating cost at the mall in winter. Gas accounts for about 10 percent of his costs.

"We can't turn the heat down," Barry said. "A 25 percent hike in prices equals a 2.5 percent rise in operating costs."

Alaskans can take comfort that even with the price hike, local natural gas prices would be about half of current Lower 48 prices.

Enstar's Dieckgraeff expects prices will rise to about $2.45 per thousand cubic feet next year. That price does not include delivery and administrative costs. By comparison, gas prices for a similar amount of Lower 48 gas hit $5.29 cents Friday. Prices have been above $3 since March.

The gas market in the Anchorage area is discrete from the Lower 48. Prices in the contiguous United States have moved higher on low supply and booming demand. In Southcentral Alaska, gas prices are set once a year through a calculation based on the price of crude oil. Local natural gas prices are recalibrated every Jan. 1. With crude prices hovering at $30 a barrel, gas is poised for a jump up.

High gas prices may reverberate into other commodities, particularly electricity.

Chugach Electric Association's rates have climbed almost 4 percent since Jan. 1 due to increased gas costs. Higher rates have been offset by higher than expected electricity sales to Fairbanks and unanticipated efficiency at a Kenai hydro-power plant, said Chugach spokesman Phil Steyer.

Municipal Light & Power executive Daniel Helmick said the utility is paying more for gas. But as a one-third owner of the Beluga gas field, ML&P is also enjoying some high cash flow, helping to keep rates low.

Helmick said ML&P will try to recover the increased costs from its customers several years from now.

High gas prices have taken some customers by surprise, said Lauren Colas, vice president of Aurora Power, a company with many large business and government gas supply contracts.

"I'm telling our larger customers - like hotels - that if you're in your budget planning period, you need to add at least another 20 percent to pay for gas" next year, she said. "People are incredulous - they say, we haven't seen this in the newspaper."

http://www.redding.com/shns/story.cfm?pk=GASHIKE-09-17-00&cat=AS

-- Martin Thompson (mthom1927@aol.com), September 18, 2000

Answers

People are incredulous - they say, we haven't seen this in the newspaper."

I think this is true for most of the population.

-- Martin Thompson (mthom1927@aol.com), September 18, 2000.

Martin, I read at least four daily newspapers a day, and I'm still getting most of my energy/oil crisis news off the internet. The major media just are not paying attention, for whatever reason. Sunday Senator Charles Schumer (sp?) of New York predicted that heating oil prices would double this winter, and if Drudge hadn't posted the AP report I'd never have seen it -- and I live in a state where a lot more homes are heated with fuel oil than anything else. Electric utilities in northern Maine and New Hampshire have asked for major emergency rate hikes in the past week because of higher oil prices, yet there was barely a ripple outside the local areas, even between northern and southern Maine. The European situation has been virtually ignored over here. It's only in places like this that anyone can learn the full story.

-- Cash (cash@andcarry.com), September 18, 2000.