Sector Plays

[excel]

Colorado families could pay $40 more over winter months

By Gargi Chakrabarty, Rocky Mountain News
August 6, 2003

Higher natural gas wholesale prices could take a bigger bite out of customers' wallets this winter and pose a problem for families that need help paying their heating bills.

A typical U.S. family that uses natural gas is likely to pay 12 percent more, or $100, in heating bills from October through March, estimates Guy Caruso, director of the Energy Information Administration.





Caruso spoke at the Colorado Oil and Gas Association's annual conference on Tuesday.

The good news is the dollar cost won't be as high in Colorado.

Coloradans usually pay less than the national average because the locally available gas is cheaper than on the East Coast or in the Midwest.

Still, this winter a typical Colorado family is likely to pay 13 percent more, or $40, over the six months from a year ago. The estimates are based on wholesale natural gas prices set by Colorado Interstate Gas.

A typical monthly heating bill was $48.88 last winter and this year is expected to be $55.38.

The Energy Administration, which is the Energy Department's statistical agency, will announce its winter forecast for national gas prices today. Last year, when gas prices were stable from October through December but soared in January, a typical family paid $801 in heating bills.

"The estimates hinge very much on the assumption of normal weather," said David Costello, EIA's economist in charge of short-term forecasts. "There is plenty of uncertainty about what could happen this winter."

Colorado Interstate Gas sells natural gas at wholesale prices to many utilities in Colorado, including Xcel Energy, which serves 1.2 million local customers.

Xcel thinks heating bills will be higher this year but won't see the 63 percent hike the company predicted in March. "The reason for the increase," said Xcel spokesman Steve Roalstad, "is because the prices that we pay for gas will be higher as well."

Roalstad said the March estimate was lowered because "the (natural gas) landscape has changed and it is constantly changing."

Wholesale natural gas - which accounts for 60 percent of a heating bill - is likely to increase more than 30 percent this winter from a year ago.

For instance, the current CIG natural gas price for delivery from November through March is $4.52 per decatherm (100 therms; one therm is equal to 100,000 Btu), up from last year's $3.45 per decatherm.

Worried about the impact of higher gas prices on low-income families, the local oil and gas industry formed a partnership with Colorado Energy Assistance Foundation on Tuesday.

The partnership is focused on helping CEAF raise money to help low-income families pay bills and weatherize their homes. The nonprofit foundation raised $5 million last year for energy assistance.

"Thousands of Colorado families are bracing for an energy cost increase that will leave many of them unable to manage their bills," said Skip Arnold, CEAF's executive director. "We're very grateful that Colorado Oil and Gas Association continues to recognize this situation and has reached out to us so that we can help as many of these families as possible."

Colorado receives about $28 million in federal energy assistance each year. But that amount won't be sufficient this year because a struggling economy and higher gas prices are likely to force more people to seek help, said Glen Cooper, of the state's Department of Human Services. Cooper's office allocates the energy assistance dollars to eligible families. "We expect a 5 percent increase in applicants. We won't close doors on anyone. We'll lower the average benefits if the money doesn't increase."

Last winter, even when natural gas prices were low and temperatures were above average, 83,000 families received heating assistance - up from 49,000 in 2000.

This year eligible families are likely to receive only $250 in assistance, down from $302 of last year.

To apply for assistance, call LEAP toll-free at 1-866- HEAT-HELP.

To be eligible, a family of four must earn $2,837 a month or less. For a family of two, the monthly income must be $1,869 or less. Funds are available beginning Nov. 1.