Natural Gas Utilities Forecast Increase in Prices; CUB Will Work to Mitigate Impact

The Public Utility Commission hosted a public hearing Tuesday on gas prices, which are going up,in a “significant” to “steep” increase kind of way. NW Natural customers will be hardest hit with a 35-40% increase. Cascade Natural Gas customers will see 15-20% increases. And Avista’s customers are looking at an increase of 10-15%. The commodity increase from the wholesale natural gas market is similar for all 3 major Oregon gas utilities; however, differences in storage history and capability, hedging strategy, resource amortization, and the institution or retirement of Commission-imposed refunds on utility rates make up the difference.

These are power cost adjustment cases, not general rate cases, and the costs have not been filed, so the opportunities for CUB to challenge the increases are unknown. Commission Chair Lee Beyer cited figures suggesting a Pacific Northwest natural gas spot market increase of around 70% from last winter to this coming winter. For the most part, utility regulation allows fuel costs to be passed along to customers. We wrote about this last month in our blog, “Energy Market Sees High Prices Across the Board.” Wholesale gas prices are at record levels and there is little doubt we will face higher bills next winter, though until we see the details of the filing, we cannot conclude that the utility forecasts are accurate.

But there are things that we can do as a consumer advocacy organization, and that you as smart consumers can do, to mitigate the fuel cost increase.

What is CUB’s role? Just as with the recent notice of rising electricity prices, we can work to make sure the utilities control their discretionary spending, and enforce efficient operations management. We pore over thousands of pages of documents in every general rate case, looking for evidence that the utilities are being as cost-effective as possible. We have already called on NW Natural to take a look at all of its operations, searching for discretionary costs that can be reduced or delayed that will allow them to offset some of these costs. We also are going to be talking to these gas utilities about liberalizing their credit and shut-off policies, so that Oregon families can stay warm when it’s cold outside. That also helps the rest of us, because shut-offs raise the price of utility service for everyone.

What can you do? Here’s a short list:

* Energy Audit - We cannot overstate how great it is to have the Energy Trust as a resource in Oregon to help homeowners lower their energy usage and cut those utility bills. Energy audit providers will have a waiting list once the weather turns cold, so call now 503-493-8888.

* Equal Pay Plan - Call your gas utility and ask them about an equal pay plan that will divide your heating costs up more equally throughout the year.

* Low-Income Weatherization Assistance—available through the Oregon Department of Housing and Community Services at 503-986-2000.

* Low-Income Bill Payment Assistance— also available through the Oregon Department of Housing and Community Services, again at 503-986-2000.

* General Weatherization Assistance - one of the core mission goals of the Community Energy Project.

These price increases, while not completely surprising, are stunning in their impact. We say unsurprising, because natural gas costs have been rising while demand has also remained high. Add in a volatile economic climate, a volatile geological climate, and this is what you get. We think higher gas prices is the new long-term trend, an energy future in which cheap fossil fuel energy is gone, and energy efficiency and renewables are no longer an afterthought, but primary drivers of our energy policy. This new status quo was reflected in the Commission’s decision to open yesterday’s public hearing with a statement about how energy efficiency and conservation can help us cope with these energy prices, from the director of the Energy Trust of Oregon.

People understand that global warming is causing more severe weather patterns, and many are also beginning to see that we have the opportunity now to build climate change policies that will reduce fossil fuel demand and prices over the long term. These policies will not pay off tomorrow, but could easily start to pay big dividends within a few years. Oregon is already moving in the direction of long-term energy stability with its recent Renewable Energy Standard. The price increases we are faced with today are a sign that we should be doing even more to reduce our reliance on fossil fuels, so that we are not so much at the mercy of these fossil fuel markets in 10 years, or 20.

CUB is very much aware that this increase is going to hit people hard, especially because electricity, gasoline, and food are all increasing as well. The New York Times reported today that, “In the last 12 months, the price index has risen 5 percent, the biggest annual jump since May 1991.”

Closer to home, a CUB member sent us an email yesterday saying “Can’t Afford 40% NW Gas Hike… Please help.” We’ll do our best. But spread the word: customers need to prepare now for the price increase coming this winter. There’s just no way around that basic fact.

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