Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: MONDAY, July 5, 1993 TAG: 9307050069
SECTION: NATL/INTL PAGE: A-1 EDITION: HOLIDAY
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
Natural-gas customers may end up paying $4.4 billion more starting next year as the industry undergoes a dramatic restructuring forced by government regulators seeking to increase competition.
Estimates on how much more per year homeowners might pay range from a low of $12 to a high of $100.
Under the plan by the Federal Energy Regulatory Commission, pipeline companies would no longer buy gas; they'll simply deliver it.
The change would allow utilities and large businesses to negotiate their own deals with producers who pull the gas out of the ground, a moved designed to increase competition and lower prices for the nation's 55 million natural gas users.
But initially, the pipelines will have to pay penalties to producers for canceling their existing contracts, and FERC is allowing them to pass on those multibillion dollar costs to customers.
"In January or February of this coming year, there's going to be a very loud outcry from consumers over the prices they're paying, a reaction to restructuring," predicted Bob Cave, executive director of American Public Gas Association, which represents 950 municipal gas companies.
FERC, which regulates interstate gas pipelines, estimates the restructuring will cost customers $4.4 billion. But that covers everyone - electric utilities as well as industrial, commercial and residential customers. State commissions will rule how it's to be apportioned among them. The agency hopes to have the plan in place by Nov. 1.
Vern Margard, a lawyer with the Office of Consumers Counsel, a state agency in Ohio that represents residential utility customers, estimates the tab for average homeowners will be an extra $100 a year.
But the Interstate Natural Gas Association of America, an industry group, disputes that estimate, saying the cost will average $12 a year per home for three years.
Already there's concern on Capitol Hill, where Democratic Reps. Eric Fingerhut of Ohio and Jim Cooper of Tennessee are circulating a draft resolution urging a suspension of the restructuring.
The General Accounting Office is looking into the matter, and Fingerhut, Cooper and some other members of Congress want restructuring halted until they can study how much homeowners will pay.
While there'll be short-term pain, consumers ultimately will fare well under restructuring, said Bruce Henning, chief economist for the American Gas Association.
by CNB