Natural gas prices to see increase


Residents waiting to see the seasonal decrease in their natural gas bill might be surprised that their charges this month were similar to what they were seeing at the height of winter. And forecasters don't expect that to change soon.

Natural gas prices are currently double what they were last summer with wholesale prices hovering around $6 per 1,000 cubic feet (Mcf) as compared to approximately $3 per Mcf a year ago.

As gas demand tapers off in the summer, prices usually drop. Normally the natural gas industry replenishes its storage supplies with the less-expensive commodity, but this isn't the case this year, said Karen Wilkes, spokeswoman for Atmos Energy.

"Gas supplies are much tighter, resulting in higher gas costs," she said.

Natural gas suppliers say that prices hit a low nine months ago when they were less than .60 cents per Mcf. That decrease limited the amount of natural gas that companies were able to recover in an economically feasible way, which led to the current shortage in natural gas supplies.

"There have been amazing swings in prices," said Mark Burford, spokesman for Tom Brown Inc. a natural gas drilling company with permits to drill in Moffat County. "We were very hurt last fall."

According to Wilkes, Atmos Energy, in an effort to offer more stable gas prices to its customers in the winter, actively seeks out storage and hedging opportunities whenever and wherever it is prudent and possible.

"Atmos Energy will aggressively pursue storage and hedging strategies again for this coming winter but the success of our strategies will depend on what the market does," said Gary Schlessman, president of Atmos Energy's Colorado/Kansas division.

The hike in natural gas prices will affect electricity prices, according to Jim Chappell, manager of consumer accounts for Yampa Valley Electric Association, but it is not yet known how much.

Excel energy passes its costs to produce electricity from natural gas directly to YVEA, which in turn passes it directly to customers. The charge can be seen on a resident's monthly bill as the Excel fuel adjustment charge.

Chappell said customers should expect that charge to increase, although there has been no indication as to how much.

"I've got a feeling that will go up," he said.

The increase in natural gas prices isn't expected to affect YVEA's cost of doing business.

"I don't think natural gas affects our day-to-day operations other than that charge," Chappell said.

Excel energy announced Thursday that it would be increasing its wholesale electricity rates by about 5 percent. The YVEA board of directors meets Saturday afternoon to discuss how much of that increase will be passed along to customers.

The Moffat County School District is one of the largest natural gas consumers in Moffat County, spending approximately $150,000 a year.

Superintendent of Schools Pete Bergmann said the district is prepared to deal with a natural gas price increase, but it's another cost that chips into the school's budget. Continued increases, combined with state cuts, could drive the district to cut programs in the future, he said.

The last time natural gas prices spiked, the school district was unprepared and took a hit. Since then, the district has budgeted high to hedge against natural gas increases.

"We should be able to handle an increase without stressing our budget significantly," Bergmann said. "If prices double, we won't be able to cover the cost in our budgeted funds, but we'll be close. The budget will be able to absorb the difference."

Bergmann said the high prices won't affect the school district so much that any programs will have to be cut.

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