CUSTOMERS FEEL HEAT ON GAS BILLS PEOPLE ACROSS THE CHICAGO AREA ARE FINDING THEIR LATEST NATURAL GAS BILLS TO BE TWICE AS MUCH AS THEY'VE EVER PAID.

By Heather Vogell and John Schmeltzer, Tribune Staff Writers. Tribune staff writer Jeff Long contributed to this report.

December 28, 2000 Diane Wilson's most recent gas bill was $183. Evelyn Dixon's latest was $306. Edward Bailey's was a whopping $944.60.

Their next bills probably will be even higher. And so will yours.

Natural gas prices soared to a record close Wednesday as homeowners across the region began receiving the first batch of heating bills sent out since temperatures dropped, making December unusually frigid.

And those who were expecting bad are getting worse. The combination of cold weather and soaring natural gas prices is doubling many bills--pushing them deep into triple digits.

"There's no way around the fact that consumers are going to have to dig very deep to pay gas bills this year," said Martin R. Cohen, executive director of Citizens Utility Board. Cohen estimates residents will pay an average $500 more during the heating season than they did last year.

For November and December, Nicor Gas customers will pay $350 million more than last year.

Dixon, 62, who owns a single-family home in Austin with her husband, said she received a $306 bill about 10 days ago. They live on a fixed income, and she suffers from lupus. The heating bills may force the couple to turn off the heat and move out so she can continue to pay for prescriptions.

For now she is keeping the temperature in her home below 60 degrees. "I told my husband, `We're just going to have to put on heavier clothes and fight this out,'" Dixon said. "This really put us deep in the hole."

On Wednesday, U.S. Rep. Danny Davis (D-Ill.) called for federal investigations into the steep rate increase and asked for the development of a national energy policy.

Officials joining Davis also advocated expanding federal aid to low- and middle-income residents for heating costs and creating more flexible payment plans for burdened gas consumers.

Bailey, 80, who owns a brick two-flat, got a $944.60 gas bill in mid-December that included $568 worth of new charges. He said he can't keep up with the increases. His monthly income from Social Security and pension payments is just $1,550.

"I can't pay it out in full, because if I do, I couldn't do anything else," said Bailey, who estimated his gas bill from last December was about $300. "You try to conserve, but regardless of that your bills run haywire."

The nearly 1.9 million residential customers of Nicor Gas spent almost $68 million on natural gas in November last year and just more than $184 million last month--an increase of about 171 percent--according to Nicor spokesman Craig Whyte.

Last December, those suburban customers spent nearly $125 million on natural gas. But they'll spend more than $357 million this month, Whyte said. That's an increase of about 186 percent.

The differences are mainly due to the higher prices utilities are being charged by their suppliers, which they in turn pass on to their customers. But cold temperatures this year also mean that customers are using more gas.

This month natural gas use by typical Peoples Gas customers increased 152 percent compared with December of last year, said Peoples Gas spokesman Luis Diaz-Perez.

The gas you buy is measured in "therms." A therm equals 100,000 British Thermal Units (BTU). A BTU is the amount of heat required to raise the temperature of 1 pound of water by 1 degree Fahrenheit.

In November 1999, which was warmer than normal, the typical home of a Peoples Gas customer used 133 therms. At about 37 cents per therm, that made a typical gas bill $49.32, not including service charges and taxes.

But this November, which was colder than last year, the typical home used 174 therms at about 66 cents per therm--and got a gas bill of $114.16, not including service charges and taxes.

Last December, the typical customer used 217 therms for a gas charge of $75.54 at about 35 cents per therm. During this year's much colder December, the typical customer burned 282 therms, for a gas charge of $190.24 at about 67 cents per therm.

Contract prices on the New York Mercantile Exchange on Wednesday soared above $10 per million BTUs for the first time before retreating to close at $9.978, 50 cents higher than Tuesday's close.

The record close is almost certain to drive higher the already high home heating costs in the Midwest. Chicago is ground zero for natural gas use. About 90 percent of the homes and most of the office buildings in the metropolitan area rely on gas for heat.

The cold snap and tight supplies forced some utilities on Wednesday to turn to the highly volatile spot market to satiate customer demand, according to Kyle Cooper, Houston-based energy analyst for Salmon Smith Barney.

While prices rose to a record high, Cooper said storage levels nationwide have dropped to record lows, causing natural gas suppliers to begin restricting withdrawals.

"As long as this weather forecast holds, I would expect still higher prices," said Cooper.

Jon Davis, a meteorologist for Salomon Smith Barney, said he does not foresee any shift in the weather pattern that he said began the second week of November.

"Right now heating demand is 13 percent above normal in Chicago," said Davis, who is based here. "Last year heating demand was 18 percent below normal because of the warmer temperatures.

"We expect this general trend will continue well into January," he said.

Thomas Robinson, director of research for Cambridge Energy Research Associates in Cambridge, Mass., said forecasting the price swings on the natural gas market has become difficult.

"Unfortunately, we are in uncharted waters in terms of pricing, and until we get through the worst of winter, there won't be much of a correction," he said.

In the short term, Robinson said, "There really is not a lot of good news for customers."

In the long term, however, the high wholesale prices, which are four-times wholesale prices this time a year ago, are prompting an unprecedented search for new supplies.

A record 800 to 900 drilling rigs now are trying to tap into new gas wells.

But it could take up to a year or more for those efforts to stream into the consumer supply, he said.

In the Chicago area, social service providers said Wednesday they have already noticed an increase in applications for federal heating subsidies compared with years past.

"We've had some people come in and say, `This [bill] can't be right, this must be for two months,'" said Ann Hernandez, executive director of the Center for Community Action in Harvey. "People were really kind of unprepared for it."

Roberta Buchanan, executive director of the Howard Area Community Center at 7648 N. Paulina Ave., said the price jump has led some residents to seek help from the agency for the first time.

"A lot of these really high bills are just starting to hit," Buchanan said. "By the end of January, we'll be seeing a lot more of these cases."

CUB's Cohen said the January bill for People Gas's customers will include the option of automatically signing up for a budget plan, which lowers monthly winter heating payments by spreading them out over the entire year. Diane Wilson, 39, a legal secretary who owns a two-bedroom home in Hegewisch, said her last bill was $183 while her bill for the same time last year was $66.

"This year it's skyrocketed. I've never paid this much for a gas bill," Wilson said. "I'm only one person in a home; I can't be using that much gas."

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-- Martin Thompson (mthom1927@aol.com), December 28, 2000