Economic Outlook Predicts Higher Heating Bills This Winter September 2, 2003
ATLANTA, Ga. - (Sept. 2, 2003) - During the 1990s, natural gas customers enjoyed relatively stable prices for clean, efficient natural gas. During the colder-than-average winter in 2002-2003, consumers saw significant increases in their heating bills. With the current tight supply, there is concern that pricing will remain high for the 2003-2004 winter.
"Gas prices are higher because there is more demand from electric generation and industry, and drilling hasn't kept up," said Kevin Madden, Executive Vice President, Distribution and Pipeline Operations for AGL Resources (AGLR), parent company of Chattanooga Gas Company (CGC). "The United States has large natural gas reserves, so there is not a shortage, but most of this gas lies beneath federally protected lands or below the ocean. The wells currently in operation are aging and do not yield as much gas."
Supply has lagged, said Madden, due to a number of factors, including colder than normal winter weather, which has driven storage of natural gas to record lows. Although steps are being taken to increase supply, prices have risen in response to demand.
During summer months, natural gas is used primarily for manufacturing and electric power generation and, in the residential sector, for cooking and water heating. But during winter, residential heating requirements increase the total demand for natural gas in excess of production and import capabilities. This is why it is imperative for natural gas utilities to store extra gas during the summer for winter use, said Madden. If the price of gas does not drop during the low-demand summer months, then gas prices will be higher the following winter.
Natural gas bills reflect transmission and distribution costs in addition to the commodity cost.
"When you receive your gas bill each month, a portion of the bill is a base charge from Chattanooga Gas Company that is regulated by the Tennessee Regulatory Authority," said Isaac Blythers, President, Chattanooga Gas Company and Atlanta Gas Light Company. "Base charges represent the cost of delivering gas to your home or business as well as pipeline maintenance and meter reading." Unique to each household or business, base charges are calculated by the volume of gas that a residence or business uses during the coldest period of the prior year. This allows CGC to calculate how much pipe and storage capacity will be needed to supply each customer in cold weather, when demand is greater. Blythers predicted that some families may have difficulty in paying their heating bills this winter, but help is available. "The Chattanooga Area is fortunate to have several organizations that offer assistance for persons who demonstrate need," he said. "The type of assistance varies. We suggest that people contact these organizations for help."
The organizations are:
- United Way of Greater Chattanooga's First Call for Help: This information and referral service has trained resource managers to help callers with their questions. Phone 423-265-8000 or visit http://cg.servicept.com/chattanooga.
- Salvation Army's Share the Warmth Program: The Chattanooga Area Command of the Salvation Army provides energy assistance to qualified applicants. Phone 423-756-1023 or visit http://salvationarmy.chattanooga.net.