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Friday January 5 9:59 PM ET Pipeline Fails To Lower Gas Prices

By JULIET WILLIAMS, Associated Press Writer

MILWAUKEE (AP) - A natural gas pipeline that began shipping fuel from western Canada to the Midwest last month has so far failed to alleviate skyrocketing gas prices.

The $2.6 billion Alliance Pipeline, based in Calgary, Alberta, started pumping 1.3 billion cubic feet of natural gas per day Dec. 1, Alliance spokesman Jay Godfrey said.

The 1,857-mile line runs from Fort St. John, in northern British Columbia, to a gas hub near Joliet, Ill. Gas is then shipped via connector pipelines to Midwestern states and eastern Canada.

Some analysts hoped the increased supply would cut gas prices.

``I guess the big hope was the pipeline was going to take the pressure off,'' said George Gaspar, an analyst with Milwaukee's Robert W. Baird. ``It kind of shows how much gas is being used (that that hasn't happened).''

Gaspar said gas shortages and a cold snap across much of the United States have greatly increased demand. Since the pipeline opened, natural gas prices have risen 50 percent in the futures market.

Natural gas prices in Wisconsin are up 100 percent compared to the same time last year, a report released Thursday by the state Department of Administration said.

Godfrey said the pipeline has prompted a record number of gas wells being drilled in western Canada, which could provide relief in the long term.

``There's a time delay between drilling, processing and shipping,'' Godfrey said. ``With space to fill, there's reason to drill.''

Alliance is one of two major pipelines in the area. The other is Great Lakes Gas Transmission, which runs 973 miles from Emerson, Manitoba to St. Clair, Mich.

He said both lines should have more gas to ship by next winter.

Also Friday, Colorado regulators approved Xcel Energy's request for a rate increase that will nearly double the average home heating bill from $73 last January to $142 this month.

The $361.6 million-dollar rate increase, the largest natural gas rate hike in Colorado history, goes into effect Saturday. The increase affects 1 million customers.

Xcel's last rate increase came in October. The company said the latest hike would help cover $115 million in fuel costs it hasn't been able to recover from customers. http://dailynews.yahoo.com/h/ap/20010105/us/gas_prices_3.html

http://dailynews.yahoo.com/h/ap/20010105/us/gas_prices_3.html

-- Martin Thompson (mthom1927@aol.com), January 07, 2001