Surge in natural gas prices prompts call for probe

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Wednesday, December 13, 2000

Surge in natural gas prices prompts call for probe

Associated Press TOPEKA -- The state's consumer advocate wants Kansas utility regulators to investigate why natural gas prices soared to a record high with the onset of freezing weather. TOPEKA -- The state's consumer advocate wants Kansas utility regulators to investigate why natural gas prices soared to a record high with the onset of freezing weather.

At the close of regular trading Monday on the New York Mercantile Exchange, the cost of gas was $9.65 per 1,000 cubic feet, up more than 100 percent from what Kansas' largest natural gas supplier was paying at this time last year.

Nationally, analysts said the higher prices could quickly start showing up in people's heating bills.

A spokesman for the Kansas Gas Service Co., which provides natural gas to 625,000 people in 300 communities across the state, said consumers wouldn't be affected immediately by the record prices.

"We don't buy any gas on a daily basis," said Steve Johnson, explaining that Kansas Gas locked in current contracts before Monday's surge in prices.

Walker Hendrix, the chief lawyer for the Citizens Utility Ratepayers Board, the state agency that represents residential consumers, called on the Kansas Corporation Commission to investigate the gas-purchasing practices of Kansas Gas and other utilities.

"They aren't negotiating all of the gas that they buy," Hendrix said, explaining that utilities agree in advance to purchase gas each month at the going market rate.

"They can flow the cost through to consumers, so they enter into these contracts based on the index feeling some comfort that prices will be reasonable," Hendrix said. "But there isn't an effective way of limiting the cost when the commodity markets get out of control."

Corporation Commission spokeswoman Rosemary Foreman said the commission closely reviews monthly price adjustments that utilities pass on to consumers.

"There is no reason to believe at this point that the companies aren't utilizing prudent purchasing practices," Foreman said Tuesday.

While commissioners are "horribly concerned" about the jump in prices, there isn't much they can do to control the market forces that are causing the increases, she said.

Johnson said when long-term and monthly contracts are factored together, the utility's average cost of gas is $7.14, including storage and pipeline costs.

He said Kansas Gas had renegotiated some of its purchase contracts but not those with its two major suppliers, BP Amoco and Oxy USA Inc

http://web.wichitaeagle.com/content/wichitaeagle/2000/12/13/kansas/naturalgas1213_txt.htm?template=aprint.htm

-- Martin Thompson (mthom1927@aol.com), December 13, 2000


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