NY:Utilities warn of higher prices

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Utilities warn of higher prices; warned about big-gas users

By JOEL STASHENKO The Associated Press 8/22/00 2:36 PM

ALBANY, N.Y. (AP) -- The state has ordered utilities to make sure big natural gas users have secured alternative fuel supplies so residents have enough gas to heat their homes at times of peak demand this winter.

The state Public Service Commission said its directive is aimed at "interruptible" customers, the large commercial and industrial users which are required to stop using natural gas supplied by utilities when the temperature plunges and gas is in short supply.

Meanwhile, New York utilities are already warning customers who heat with natural gas that bills are likely to be considerably higher this winter due to a spike this summer in the price of natural gas on the wholesale market.

"We have been advising customers to expect, depending on the weather, for home heating bills to be 15 to 20 percent higher than last year," Niagara Mohawk Power Corp. spokesman Nicholas Lyman said Tuesday.

The biggest commercial natural gas users are supposed to go without utility-supplied gas at times of peak demand so other customers, chiefly residents who heat homes with natural gas, will be guaranteed a steady supply. In return, interruptible customers pay lower prices for the natural gas they do use.

"We need to protect residential supply, of course, because residential customers generally don't have an option" of using an alternative energy to heat their homes, Lyman said.

A series of relatively warm winters lulled interruptible customers into believing that supplies of alternative fuel, like oil, would be available at reasonable prices, said PSC Chairwoman Maureen Helmer.

However, that assumption proved wrong during a two-week stretch of frigid weather last winter.

Helmer said unprepared interruptible customers were forced to either remain on utility systems or to attempt to buy alternative fuel supplies on the spot market, driving up the price and eating into remaining supplies.

"A repetition of last winter's situation is unacceptable," Helmer said.

Adding to the potential for problems this winter are the "significant risks" that have developed this year because of volatility in the price and supply of oil, state officials said.

Under the PSC's orders:

--Interruptible customers must show by Oct. 1 that they have a seven-to-10-day supply of alternative fuel for this winter, either in storage or through a reliable supplier.

--Utilities must charge interruptible customers which are not in compliance with the stipulation higher rates for natural gas.

The PSC said it reserves the right to require interruptible gas users to have larger alternative fuel reserves if gas supplies become especially tight or the weather becomes particularly cold.

The PSC directive applies to Central Hudson Gas & Electric, Consolidated Edison, KeySpan, National Fuel Gas, New York State Electric and Gas, Orange and Rockland Utilities and Niagara Mohawk.

Lyman said that while Niagara Mohawk is working with its 45 interruptible customers to get them to comply with the PSC order, the utility is not altogether happy with the directive.

"Frankly, we don't want to be in the business of being energy cops," he said.

Niagara Mohawk's estimate of 15 percent-to-20 percent heating bill increases this winter is similar to one being made by Rochester Gas and Electric to its customers. Notices are going out to its customers who heat under its budget plan -- which averages payments out over all 12 months instead of paying varying amounts each month -- to expect heating bills to jump 20 percent this winter.

During the past four months, the price of natural gas has increased about $2 per decatherm, which is the common measure for the fuel. Natural gas was at $4.70 a decatherm on the New York Mercantile Exchange.

Most utilities buy about half their supply of winter gas between late spring and early autumn. Prices tend to increase in the winter, when demand goes up due to falling temperature.

http://www.syracuse.com/newsflash/index.ssf?/cgi-free/getstory_ssf.cgi?n0626_BC_NY--NaturalGas-Winter&&news&newsflash-newyork-syr



-- Martin Thompson (mthom1927@aol.com), August 22, 2000


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