Signs point to higher utility bills this winter
Brace yourselves. Monthly utility bills are about to get even higher.
Not only are prices for gasoline and diesel up, but natural gas prices are also climbing. By a lot.
"There is no question prices are going to be high this winter," said David Kolata, executive director of the Citizens Utility Board, an Illinois consumer advocacy group. "Consumers are in for a tough winter," he said.
AmerenIP monthly bills could be $15 to $30 higher this winter, according to Ameren. And that's if the weather is normal. A colder-than-normal winter could push bills even higher.
"We are anticipating natural gas prices to be significantly higher than last winter," said Shirley Swarthout, a spokeswoman for AmerenIP.
Gas bills are divided up several ways. Delivery charges for gas (which cover the utility's costs of maintaining the gas lines, billing customers and other services) are fixed for a certain time period and are regulated by the state. What often fluctuates is the gas charge. This is the price the utility pays for the gas and passes on to its customers. Typically, the gas charge in winter months makes up about three-quarters of the bill, Swarthout said.
AmerenIP rates for purchased gas will be 96.87 cents per therm in October, up from 77.27 cents in September. AmerenCILCO rates will rise from 88.12 cents to 95.54 cents per therm. (Natural gas customers are charged by the therm, which is a unit of heat.)
Natural gas prices have been climbing for several reasons, Swarthout said. It was a hot summer, which meant more air conditioners were running. And power plants that supply electricity for air conditioning needed more natural gas to generate electricity. Production of natural gas has not increased. And finally, hurricanes in the Gulf of Mexico disrupted production and transportation of gas produced there.
"Wholesale prices of natural gas are market commodities and, like other market commodities, fluctuate on supply and demand," Swarthout said. "Well before Hurricane Katrina hit, there were already forecasts of an active hurricane season, and that helped push up the price even before we saw the devastating hurricane," she added.
Ameren buys from several suppliers, and its natural gas comes from pipelines from production areas in Oklahoma, Texas, along the Gulf of Mexico and other regions.
Utilities like Ameren buy natural gas using futures contracts and through hedging, Kolata said.
"It is true demand is up because more natural gas is being used to generate electricity," Kolata said. However, he pointed to the natural gas markets and exchanges where natural gas is traded. "What we're seeing is natural gas markets failing consumers," he said and called for better monitoring of the markets.
Natural gas contracts traded on the New York Mercantile Exchange have doubled since this time last year, said Heather Viele, general manager for the Illinois Municipal Gas Agency. The Auburn-based agency buys natural gas for municipalities, such as Rantoul, that own their gas systems. Area members of the agency also include Rossville and Westville.
"Hopefully prices will not go up from here," Viele said.
Factors that could push prices up or down include how much more supply will be available and how quickly that supply will be available, how much natural gas is stored going into the winter, whether or not there are more hurricanes and tropical storms that could affect production and transportation and winter weather, Viele said.
"If they all work to our advantage, we will see a price drop," she said.
The past few winters in Illinois have been fairly mild.
"The most recent winter forecasts are for normal to slightly above temperatures. That would help gas industry and prices very much," Viele said.