Mass Heating cost increases pushing 30 percent

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12.4.2000 08:05 Heating cost increases pushing 30 percent Agencies brace for a higher demand for help as the state moves to stockpile heating oil reserves.

By MARK REYNOLDS Journal Staff Writer

Massachusetts residents can expect to pay a lot more to stay warm this winter, according to analysts predicting an increase of at least 25 percent in natural gas prices and a double-digit boost in the cost of home heating oil.

Barring any unforeseen change in climate this winter, an average heating customer buying natural gas from Fall River Gas can expect to see a 27 percent increase, a monthly jump of about $33.89, according to a spokesman for the Department of Telecommunications and Energy, Robert Wilson. And the average customer supplied by Bay State Gas Co. will see a monthly increase of $32, according to a company spokeswoman, Carol Churchill.

The high demand stems, in part, from the choice of certain industrial customers to buy large quantities of natural gas instead of oil, another pricey commodity in the energy market this season.

The average retail price for heating oil was $1.55 per gallon on Nov. 27, up from $1.22 per gallon on Dec. 6 last year, according to calculations by the Massachusetts Division of Energy Resources.

Wilson said he is uncertain whether prices are peaking.

"It's hard to tell," Wilson said. "... If for some reason the winter is much colder and they have to go out and procure more on the spot market, it gets a lot more expensive."

The speculation comes as local assistance groups brace for icy conditions and the government takes steps to head off another crisis like the one that occurred last winter when heating-oil prices spiked by more than 70 percent over a three-week period.

Liz Correira, who directs a Citizens For Citizens fuel-assistance program for about 11,000 clients in the Fall River area, said her organization expects the price of natural gas to increase from 25 percent to 50 percent this winter.

Correira said average monthly heating bills were $50 in the past, but they could be $75 to $80 this year.

"We're going to get our first round of bills next week and I think they're going to be a lot higher than they were for October and November of last year," Correira said.

Citizens For Citizens will administer about $5 million worth of federal aid earmarked to help people in the region pay fuel costs. The program limits a household's aid to $630 per winter.

The bulk of its 11,000 clients, some 6,500 of them, heat their homes with natural gas. About 26 percent heat with oil, and the remainder use wood, electricity or coal.

The climbing prices have made it hard to calculate whether the allocations will be enough to pay heating bills through the winter, Correira said.

"I think it depends on the weather," she said.

"Now it may only get you halfway through the season," she added.

It is against the law for a utility company to stop providing home heating resources such as natural gas or oil anytime after Nov. 1.

Correira said if people apply for the aid earlier in the winter, the program will be in a better position if it needs to request aid during the final months of the season.

Meanwhile, the Massachusetts Division of Energy Resources is trying to avert any potential supply calamities by stockpiling oil this year.

Some analysts believe rising oil prices last year were exacerbated by low inventories. Wholesalers were unwilling to buy and store oil because they feared an unexpected price drop would suddenly devalue their stockpile.

In a series of negotiations that concluded Thursday, the division awarded contracts to seven companies for the inventorying of 34 million gallons, an increase of 60 percent. The oil will be stockpiled until Jan. 15.

Jean Commiskey, a spokeswoman for the division, said the Global Montello Group is storing 30,000 barrels at a site in New Bedford.

"If we have, for example, a weather event _ a very cold snap _ the more inventory you have in storage, the easier it will be to get it to the people who need it because it's colder," Commiskey said.

David O'Connor, the division's commissioner, said the program will not cost more than $5 million and if oil prices rise, any proceeds from the eventual sale of the stockpile will be divided between the companies and the state.

"With inventories low and temperatures starting to fall," said O'Connor, "Massachusetts has been working feverishly to protect 1 million oil-heat consumers and hundreds of retail dealers from difficulties in getting heating oil."

http://www.projo.com/cgi-bin/story.pl/towns/04643321.htm

-- Martin Thompson (mthom1927@aol.com), December 05, 2000


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