Soaring Gas Bills Warm Western Kentucky Region

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Soaring Gas Bills Warm Western Kentucky Region

Source: Knight Ridder/Tribune Business News Publication date: 2000-11-22 Arrival time: 2000-11-24

Nov. 22--Western Kentucky Gas Co. customers should brace for even higher gas bills this winter than earlier predicted -- up to 75 percent higher than a year ago, company officials said Tuesday. Some of the company's 33,000 customers in western Kentucky are already feeling the pinch on their November bills, especially people on the budget-billing plan that allows customers to spread out the costs over a 12-month period.

John Terry of Paducah is such a customer. On Friday, his budget-billing plan jumped from $59 a month to $116 a month, a 98 percent increase. "I can understand an increase of $5 to $20 a month, but my word, $57," he said Tuesday. "It's outrageous."

Company officials in Owensboro said they simply did not know the prices would escalate so high when the budget-billing rates were calculated in May for the 10 percent of their customers who opt for the plan. Rates were based on a customer's previous rate. "We were unaware of that (higher) trend," said Gary Smith, vice president of marketing for Western Kentucky Gas.

By June, gas company officials were predicting that prices could be 40 percent or higher, and started warning customers of the increase and monitoring the budget-billing customers.

As October approached and the increases became evident, company officials agreed to adjust the bills of the budget-billing customers for the remaining six months.

Smith said the company was faced with doing nothing and leaving customers with higher than usual settlement costs of upwards of $300 in the spring.

"I feel that would not have been customer friendly," Smith said. Customers were informed in a recent letter that their budget-billing costs would be adjusted.

"I understand gas was going up, but I didn't understand it was going to go up 98 percent," Terry said, adding he was concerned about people who are on fixed incomes.

Customers can still opt out of the budget-billing plan. Most would have credit from the summer months to offset the higher costs, Smith said.

Meanwhile, local propane companies are watching the natural gas prices. If natural gas prices get high enough, suppliers could opt to leave the propane in natural gas, creating a shortage of propane gas, said Jeff Cain, chief financial officer for United Propane Gas in Paducah. Propane is extracted from natural gas and sold as bottled gas. United Propane serves several thousand customers in western Kentucky.

That action hasn't been taken so far, and the natural gas supply remains high. Cain says he remains hopeful of a drop after the first of the year. At United Propane, the price of propane has remained about the same for the past year, ranging from $1.05 to $1.30. The price is now at last year's high end.

Western Kentucky Gas officials point to several factors contributing to the higher-than-usual costs. The increasing use of natural gas instead of coal by the generating power plants is one factor. Natural gas companies were not able to buy gas at the traditionally cheaper summer rate earlier this year and store it for winter use.

And then there were two consecutive winters that were warmer than usual, taking away the incentive for producers. Smith says that appears to be changing.

The number of drilling rigs has doubled in the past six months, he said.

Tom Higdon of Western Kentucky Gas said, "At some point, the supply is going to take over" -- not this winter but "hopefully it will be before next winter. It's just going to take some time."

If getting a gas bill that's 98 percent higher than expected wasn't enough, Terry said the bill he received on Friday had a due date of Monday before a late fee was applied. Company officials were not sure why the bill was so late in arriving, but said they don't think it is evidence of a widespread problem.

The bills are mailed from Dallas to Kentucky and occasionally arrive late, Smith said. Normally, customers have a 14-day return cycle.

Smith said the company is sensitive to customers who have received their bills later than usual, and said payment times would be extended under such circumstances.

http://cnniw.yellowbrix.com/pages/cnniw/Story.nsp?story_id=16029319&ID=cnniw&scategory=Energy%3ANatural+Gas

-- Martin Thompson (mthom1927@aol.com), November 24, 2000


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