DATE: Tuesday, November 25, 1997            TAG: 9711250597

SECTION: BUSINESS                PAGE: D1   EDITION: FINAL 

SOURCE: BY AKWELI PARKER, STAFF WRITER 

                                            LENGTH:   54 lines

NATURAL GAS CUSTOMERS ARE WARNED THAT BILLS MAY RISE THIS YEAR MARKET CONDITIONS FAVOR LITTLE CHANGE - AT LEAST FOR NOW.

Last December when natural gas prices leaped 20 to 30 percent for some residential natural gas customers, shocked ratepayers flooded the State Corporation Commission with more than 1,400 calls.

``They wished someone had given them advance warning,'' said SCC spokesman Ken Schrad.

Well, this year they're getting it. The SCC is cautioning people who heat their homes with natural gas that ``conditions are right for higher bills again this winter.''

Commonwealth Gas Services, which serves parts of Portsmouth and Chesapeake, put ``interim rates'' in effect Oct. 18 that will result in an average $3.61 increase for the average residential customer using 7,000 cubic feet of gas a month.

Virginia Natural Gas did not immediately disclose if it had plans for an increase.

Lots of factors go into pushing up the price of gas, but the main one has to do with the structure of the natural gas market itself.

Although the SCC plays a big role in setting utility rates, which include the cost of transmission and distribution, it has no control over the cost of the gas commodity itself.

That's determined by national, competitive markets that can fluctuate wildly based on the weather or current events, such as what happens at OPEC meetings or the latest shenanigans of Saddam Hussein.

Utilities like Commonwealth Gas Services and Virginia Natural Gas employ buyers whose sole job it is to look for bargains on large-scale gas deals.

At the Henry Hub market center in Louisiana, natural gas traded at $2.63 a million British thermal units Monday, a far cry from last

January's 52-week high of $4.60 a million Btu. For the short term, at least, it appears prices won't deviate too much from present prices.

Spot prices and futures prices plummeted last week after the American Gas Association estimated that gas inventories dropped 64 billion cubic feet to 2,750 billion cubic feet - a decrease that fell short of many expectations.

Industry analysts and traders say the price plunge in futures - long-term contracts made to lock in a certain amount of gas at a certain rate - suggests that supplies are adequate for the winter.

The brutal winter of 1995-96 cut deep into natural gas supplies, prompting the shortage - and runaway gas bills - of last winter.

Mike Anderson, a spokesman for Commonwealth Gas Services, lauded the SCC's effort to educate consumers about their utility bills.

Although the AGA says residential bills have decreased in the past decade as a result of deregulation, Anderson concedes, ``we're aware that consumers don't like to be surprised by bills.'' MEMO: Bloomberg Business News contributed to this report. KEYWORDS: UTILITIES VIRGINIA NATURAL GAS

Send Suggestions or Comments to webmaster@scholar.lib.vt.edu