PG&E customers face higher natural gas prices

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Posted at 9:45 p.m. PST Wednesday, Jan. 3, 2001

PG&E customers face higher natural gas prices

With natural gas in short supply nationwide, PG&E's residential customers this month will see their average gas bill jump to $125

BY JOHN WOOLFOLK Mercury News

Get ready for a shock from your next Pacific Gas & Electric Co. bill.

With natural gas in short supply nationwide, PG&E's residential customers this month will see their average gas bill jump to $125, up 62 percent from December and 150 percent more than a year ago.

But that's not all.

If the state Public Utilities Commission today approves a proposed three-month electric rate increase, PG&E's residential customers would pay an average of $59.40 a month for power, 9 percent more than the $54.50 they now pay.

And that could bring the total average residential bill for gas and electric to about $185, up from $105 a year ago.

Commercial customers would see electric rates rise 7 percent for small companies, 12 percent for mid-sized businesses and 15 percent for large industrial firms.

The higher electric rates could show up on bills as early as this month, said PG&E spokesman John Nelson.

The proposed electric rate increase fell far short of the 26 percent that PG&E wanted, which would have been its biggest since the early 1980s. But that's little consolation to customers reeling from rising energy costs.

``My bills are already really high,'' said Brenda Albrecht, owner of Dolphin Pet Village in Campbell, where lights, pumps and heaters work round the clock to keep hundreds of fish, reptiles and birds comfortable.

Gas prices have raised her store's energy costs from about $4,000 to well over $5,000, so even a modest electric increase will hurt, Albrecht said.

``Seven percent, that's going to add up, especially with weather as cold as it's been,'' Albrecht said.

At home, where gas prices have doubled Albrecht's bill, she said: ``I don't know about you, but it's long underwear and sweats for me.''

Most customers would have little recourse to avoid the electric rate hike, if it goes into effect. Poor customers eligible for low-income assistance would be exempted, but a family of four could earn no more than $34,100 to qualify.

And while customers have the option of switching to another energy service provider under deregulation, they're not likely to find any deals. The ``customer choice line'' on the PG&E bill directs customers to a list of dozens of other energy providers. But many aren't taking new customers or don't offer better prices.

The 50,000 California customers of Green Mountain Energy Co., for example, pay about $5 more each month for electricity than customers of PG&E, said spokesman Richard Counihan. That's because the company markets higher-priced ``green'' power from solar and wind sources, he said.

Green Mountain doesn't offer natural gas service, and isn't expecting a rush of new customers from PG&E, Counihan said.

``Most of our customers do it because they care about the environment,'' Counihan said. ``They're not shopping for the lowest prices.''

Other listed companies, such as New West Energy, have suspended service in California because of the uncertainty over deregulation. Still others, such as United Energy Management, aren't taking new customers, and the customers they have pay about the same as PG&E rates.

Home and business owners say they can only do so much to reduce energy use.

At Albrecht's pet store, reducing heating, pumping and other energy needs simply isn't an option.

``We'd have little bird-cicles,'' Albrecht said. ``The only way you can keep that livestock going is with electricity and gas.''

At home, where Albrecht has a wood-burning stove, she worries about the air pollution it causes.

Both gas and electric rate increases are rooted in high demand and tight supply, courtesy of deregulation. Competition was supposed to bring lower prices, but with gas and electricity now in short supply, prices have skyrocketed.

Power plant construction didn't keep pace with California's population and economic growth. Now there isn't enough electricity generation to meet the demand, causing wholesale power prices to soar.

But electric rates charged by the state's biggest utilities, PG&E and Southern California Edison Co., have been frozen during the transition to competition under the 1996 deregulation law. PG&E and Edison are now paying more for power than they can charge consumers and say that without a rate increase, they will go bankrupt.

Natural gas has been deregulated for more than a decade, and oversupply kept prices low in the 1990s. But those low prices discouraged companies from drilling for gas, said Bill Wood, chief natural-gas forecaster for the California Energy Commission. Now, there aren't enough wells to meet demand, even though gas reserves are plentiful, he said.

Wholesale natural gas prices have risen fourfold nationally from $2.30 per million British thermal units last January to $10 today, Wood said. With prices now high, companies have doubled their drilling, but it will take a year or two before prices fall again, he said.

The gas problem is even worse in California for two reasons, Wood said. Power plants burned twice as much natural gas this year by running full tilt to ease the electricity shortage, Wood said.

Meanwhile, demand has outpaced the capacity of the gas pipelines supplying the state, built in the early 1990s, he said. It will take a few years before new pipes come online to increase supplies, he said.

-------------------------------------------------------------------------------- Contact John Woolfolk at jwoolfolk@sjmercury.com or (408) 278-3410

Your RISING power bill

Here's how average residential PG&E customers are affected by rising rates. All rates are monthly:

Natural gas January 2000, $50 December 2000, $77 January 2001, $125

Electricity 1990, $52 1993-1995, $61 January 2000, $54.50 December 2000, $54.50 Proposed 9 percent increase, Jan.-Mar. 2001, $59.40 Pacific Gas & Electric Co

http://www0.mercurycenter.com/local/center/bills0104.htm

-- Martin Thompson (mthom1927@aol.com), January 04, 2001


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