Wyoming Gas, electricity prices to rise

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Gas, electricity prices to rise By Jessica Lowell Wyoming Tribune-Eagle

CHEYENNE – A crisis is brewing in the natural gas and electric markets that will hit the budgets of Cheyenne residents – hard. Industry officials and regulators are warning that the price of natural gas, already high, will rise even higher.

Because of the growth of natural gas-fired electric generation plants, the price of electricity also is on the rise.

Xcel Energy President Rick Kaysen said Thursday his company will file applications for both electric and natural gas pass-through increases with the Public Service Commission of Wyoming in the first week of January.

That would mark the third request for an increase in natural gas prices in less than a year.

Wyoming Public Service Commission Chairman Steve Ellenbecker warned Thursday at a news conference that retail natural gas customers should anticipate and plan for increases in their retail rates of more than 100 percent.

"That’s due entirely to the increase in wholesale, deregulated commodity prices in the natural gas market, which your local utility must pay to buy the natural gas it needs to serve its customers," Ellenbecker said.

These increases are not just limited to Cheyenne or Wyoming. Consumers across the West are being forced to pay significantly higher prices for natural gas and electricity this year.

Wholesale natural gas commodity prices are at all-time highs this week. A year ago, the price for 1,000 cubic feet was $2.50. The price for January delivery is $9, a 260 percent increase on the spot market.

On Tuesday, however, natural gas prices on the southern California border were trading as high as $25, and Wednesday the price rose as high as $37.50.

"We are in a critical market situation where demand for natural gas is now, and will be into the foreseeable future, far greater than the supply," Ellenbecker said.

The reasons are many, and the explanation is long.

Ellenbecker said natural gas is increasingly the fuel of choice for electric generation plants.

In the past, he said, natural gas was considered a seasonal heating fuel.

This year, a hot summer pushed up the demand for electricity to run air conditioners. And now cold weather across the West is continuing the strong demand for power.

"(All of this) happened at a time when electric utilities have basically stopped building large coal-fired generators like the ones we have here in Wyoming," he said.

"Utilities across the nation are not building sufficient new generating plants or transmission facilities to meet this escalating demand."

And while Wyoming is a major producer of natural gas, state residents are not protected from high prices, Ellenbecker said. The reason is that the natural gas is priced according to regional or national markets.

The increases that customers are seeing in their bills come from the wholesale market.

That market is deregulated, and state regulators have no authority to control those prices.

When prices rise, as they have been, companies like Xcel Energy, formerly Cheyenne Light, Fuel and Power, seek pass-through increases, allowing them to pass the higher commodity prices to customers on a dollar-for-dollar basis. When the prices drop, the pass-through increases drop at the same rate.

Earlier this year, regulators and industry experts were expecting wholesales prices to peak through this year’s heating season and ease in the spring.

But they have now withdrawn that predication.

"No one, including the representatives of power and gas companies, knows what the prices will be tomorrow," Ellenbecker said. "The indications are that the high prices will reach (even) higher levels and have a longer life."

One of the specific culprits is the state of California, which deregulated its electric power industry two years ago.

"It has not worked well to date," commissioner Steve Furtney said. "In fact, it is putting distorted market pressures on electric power rates in neighboring states, and we are beginning to see signs of increasing price pressures in Wyoming."

California has more electric users than the rest of the Western states combined, Ellenbecker said.

And its deregulation of electric power, coupled with curtailed power generation, drove historic price increases over the summer and compelled Gov. Gray Davis to impose caps on the wholesale market.

Traditionally, California has provided excess power to the Pacific Northwest to meet peak heating demands in winter. In the summer, the power has flowed the other way to meet the high demands of air conditioning.

Furtney said excess demand has consumed the excess supply, and now those states are looking to neighboring states in the West for more power.

"This is triggering a chain reaction," Furtney said. "They are bidding up power prices."

Here in Wyoming, he said, Wyoming utilities now face rising wholesale contracts on electric power purchases.

Xcel Energy is one of those companies. The company is now negotiating contracts in a highly volatile market.

Because of the role that California is playing in the Western power picture, state regulators and Gov. Jim Geringer will call on Davis to end the cap and ease emission restrictions – the reason some power plants there have been shuttered.

Geringer’s acting press secretary, Melinda Brazzale, said Thursday the governor is expected to set up a conference call in the near future with key Western governors to start to develop both short-term and long-term solutions.

In the meantime, the commissioners renewed their warning that business and residential customers should plan now for historic price increases to help avoid the crisis situation that’s now developing.

Conserving Energy

CHEYENNE (WTE) – To offset the effects of historically high gas and electricity prices, experts are urging customers conserve energy when they can.

Here are some tips:

Turn down the thermostat at night or while the house is empty.

Turn the thermostat on your water heater down to no higher than 120 degrees Fahrenheit.

Turn off unnecessary lights and appliances.

Close off unused rooms.

Make sure your furnace is operating at peak efficiency; in the winter, change filters monthly.

Make sure windows and doors are properly installed, and properly caulked. Install storm windows or use plastic sheeting.

Insulate ceilings, walls and floors over unheated basements.

Heating assistance available

Several heating assistance programs are available to Wyoming residents.

Here’s the rundown:

Low Income Energy Assistance Program

The program helps low-income families by providing three direct payments to fuel suppliers. The amount of benefit is based on fuel type, family income and the number of people in the household.

In crisis situations, the program will pay up to $400 once for heating-related crises such as tank hookups or to avoid shutoffs.

For more information, call (800) 246-4221.

Weatherization Assistance Program

Helps families who are eligible for LIEAP with home energy-related repairs, whether the home is rented or owned.

The repairs include repairing or replacing windows, installing insulation, carbon monoxide testing, and even replacing the furnace.

Contact the LIEAP office for information. There may be a waiting list for these services.

For more information, call (800) 246-4221.

Energy Share of Wyoming

This program provides assistance to those who do not qualify for LIEAP assistance and are experiencing a family or medical crisis that makes it difficult for a family to pay the power bill.

To apply, contact the Salvation Army at 634-2769.

http://www.wyomingnews.com/story01-main.htm

-- Martin Thompson (mthom1927@aol.com), December 08, 2000


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