10/11/2000

City warns of much higher gas prices this winter

By LORI GLENN | Respond to this story

MOULTRIE -- Brace yourself for the bitter months.

The South is trying to stave off the cold of record low temperatures these last several days, and many residents are already turning on the heat -- and this year, they're going to get burned.

Wholesale natural gas prices are likely to increase by 60 percent this winter over last winter, said authorities at the U.S. Department of Energy (DOE). And that's with normal weather. If a bad winter sets in, demand (already increased to fuel the growing number of gas-fired electric generation plants across the nation) will increase further, thus driving up the cost even more and staying elevated through 2001.

"What has changed is that there is a demand in the summer to match the demand in the winter," said City Manager Tony Rojas.

About 30 percent of the city's utility customers (some 2,500 residents) consume natural gas to heat their homes, heat water, fuel stoves and fuel clothes dryers. A City of Moultrie residential customer who had a $75 gas bill this past January will probably have a bill of $100 to $105 in January 2001, if the current price trend continues, said city officials.

Rojas said Moultrie has joined forces with nearly 500 other municipally-owned natural gas systems across the nation to voice concerns in Washington, D.C. The American Public Gas Association, of which Moultrie is a member, recently requested both the DOE and the Federal Energy Regulatory Commission to investigate the situation, said Rojas. However, because the wellhead price of natural gas was deregulated more than a decade ago, the city expects little in the way of help.

"Ultimately, the forces of supply and demand are expected to move back toward a balance, but this may take some time. In the interim, the City of Moultrie will do everything in its power to hold down the overall costs to its customers," he said.

The city does not apply service charges based on percentages of wholesale gas prices, said Department of Utilities Director Roger King, but charges a set cost margin, which has not risen in three years despite that the municipality has to put out more money to acquire natural gas.

"It may keep going up. It's a free market now, not regulated. The federal government deregulated natural gas, so what you've got going on is there's more demand than there has been in the past. And a lot of this will depend on how the winter is. If the doggone people who are selling the commodity in the market think it's going to be a cold winter with a higher demand for it, they're just going to run the prices up," said Rojas. "We have no control over the wholesale cost."

"If it is a cold winter, the supply will get tight," said King. "If it's very cold, the demand will be high, and our supplies are going to dwindle quickly. If we have a cold December and a cold January, it's going to get awful scary around February, and probably we will have more restrictions on how much we can draw from (pipelines). We typically have about three or four a year, and last year we had about 10. I wouldn't be surprised to see more than that this year."

"This is a national phenomenon not a Moultrie phenomenon. More than anything we're trying to be proactive in informing the customers so the customers can make plans today knowing they will pay more than they usually do in the winter months to heat their homes, so that they can modify their behavior -- you know, wearing sweatpants, sweatshirts, put your thermostat at 68 degrees...," said Rojas.

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-- Martin Thompson (mthom1927@aol.com), October 11, 2000