ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Thursday, December 19, 1996 TAG: 9612190078
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
The price many homeowners and businesses in the Roanoke Valley pay for natural gas is going up more than 25 percent this winter. That's because Roanoke Gas Co. is paying much more than it expected for gas.
Roanoke Gas customers who pay on a yearly budget plan will see the increase in January, when their bills will rise 27 percent, said John Williamson III, the company's vice president for rates and finance. That means a customer who has paid a budgeted amount of $80 a month in the past will see his January bill jump to nearly $102.
Budget customers will get adjusted bills through June, the remainder of the budget year, Williamson said.
Non-budget customers who pay each month for the gas they used the previous month may already have noticed a sharp price increase.
December bills for those customers are running $7.32 per 1,000 cubic feet of gas, compared with an Oct.1 rate of $5.73. The price will go up about another 15 cents in January.
Roughly 13,000 of Roanoke Gas' 47,000 customers in the Roanoke Valley pay on a budget plan. The company has other gas customers in Bluefield and also operates a propane subsidiary.
January gas bills will contain a mailing that explains the price situation, Williamson said.
Wholesale gas prices make up a large portion of a customer's gas bill, along with pipeline transportation costs, operating costs and company profit. Roanoke Gas is paying about 50 percent more for gas now that it had anticipated in the summer.
The State Corporation Commission allows companies to recover from customers the amount they have to pay producers for gas. Normally, Roanoke Gas files with the SCC quarterly for a rate adjustment based on its gas costs; but because of the current volatile situation, it has asked the SCC to be allowed to adjust its rates monthly, Williamson said.
The Wall Street Journal reported Tuesday that the futures price of natural gas on the New York Mercantile Exchange hit a record high this week of $4.47 per million British thermal units. During the summer, Roanoke Gas was projecting a price of $2.80 per million BTUs.
The higher gas prices are attributed to the severe winter weather forecast for much of the country this weekend and a lower amount of gas in storage. Williamson noted that energy prices across the board are up, as anyone who drives a car or buys fuel oil also can attest.
One thing affecting gas prices now is that many distribution companies used their cheaper, stored gas early last winter, dropping gas in storage to record low levels, Williamson said.
As utilities rebuilt their storage supplies over the summer, gas prices remained high. On top of that, it got colder earlier in the winter this year, increasing the demand for gas and putting upward pressure on prices.
Williamson said the deregulation of the gas industry has led to greater fluctuations in gas prices. Companies such as Roanoke Gas now have to go into the market and find their own gas supplies, whereas before deregulation, pipeline companies bought the gas on long-term contracts at a fixed price and sold it to local distributors.
The SCC doesn't allow local distributors to buy futures contracts on gas, but Roanoke Gas has started talking with the SCC staff about changing that policy, Williamson said. If the state had allowed it, Roanoke Gas could have locked up the gas it needs for this winter in futures contracts last summer at prices much cheaper than it is now paying, he said.
Williamson acknowledged that there's always the danger of locking up a contract for gas at one price and then the market price dropping below that, but he said the company believes on average it would do better if it hedged against price increases.
LENGTH: Medium: 71 linesby CNB