Natural Gas Prices (October 14, 2005)
Lower Valley Energy
is a cooperative utility – we are owned by those we serve and any profit
we make is returned to our members. We listen and gain direction from
our members, we work and serve our members, and we’re here to provide
the least expensive, most reliable energy with the best customer
service.
We strive to keep our
members informed through direct mailings, billing inserts and
newsletters but perhaps we should do even more to get the word out
regarding projected natural gas prices for this coming winter.
Let me say for the
record, the Lower Valley Energy Board of Directors and employees dislike
rate increases just as much, if not more than our members. In 1997, we
introduced natural gas at .70¢ per therm and have had three rate
increases since then. When comparing the introductory .70¢ rate to our
current price of $1.33 per therm, this equals a 90% increase in price
over the span of eight years. On a national level, the average
residential rate has experienced a 115% increase over this same time
period according to the Department of Energy.
As is evidenced daily in the news, it is
projected by the Department of Energy that heating bills across the
nation will be anywhere from a third to fifty percent higher for most
families this winter, with the sharpest increases expected for those who
heat with natural gas. The Department of Energy also forecasts that
across the country, natural gas users can expect to pay an average of
$350 more during the upcoming winter compared to last year, an increase
of 48 percent. Those who heat their homes with fuel oil will pay $378
more, or 32% more than last winter. Propane users can expect an increase
jump in their bills similar to those of fuel oil users.
On a local level, the cost of fuel
accounts for 69% of the price Lower Valley Energy charges residential
members. It is projected that wholesale natural gas prices for the
Rockies Index will hover around $12 per thousand cubic feet through the
winter’s heavy demand period. This is twice what it cost Lower Valley
Energy last winter. We realize this poses some tough spending choices
for low-income families and despite Lower Valley Energy’s attempts to
contain retail fuel costs, heating bills for gas users this winter are
expected to be significant.
In the 8 years we
have offered natural gas service to our members, we have never had
natural gas prices this high or had them increase so quickly, and that
concerns everyone of us at Lower Valley Energy. We are encouraging
everyone who can spare a few cents each month to sign up for our
Operation Round-up Program so that we can build up funds to help
neighbors who may need assistance this year in paying their heating
bills. We also encourage those who need assistance to contact us to
apply for Operation Round-up help. Lower Valley Energy is also helping
customers who need assistance in applying for LIEAP, which is a
government program that distributes money to help low-income families
pay their fuel bills. Once again, we encourage all members who are not
participating in Operation Round-up to join and help those who may need
a little assistance this winter.
Part of the reason
Lower Valley Energy is engaged in the Hoback Canyon natural gas pipeline
is to help stabilize prices and gas procurement. Natural gas is not a
stable market like electricity. The volatility of natural gas and the
commodity-like trading of this energy source prevents long-term
contracts like those we’ve secured on the electric side in the past.
Hedging the natural gas market with balancing accounts has been our
strategy but as with any volatile commodity market, hedging is never
foolproof.
With the introduction
of natural gas service eight years ago, against the typical cooperative
model of serving only electricity and at the repeated request of
our members, we were and still are confident that natural gas is a
viable and practical energy source. Yes, the price of natural gas has
gone up markedly since it was first introduced, but the other benefits
of natural gas still remain; it is a safe, clean, domestic, efficient,
versatile and dependable energy source.
Kinder Morgan, a
natural gas provider in eastern Wyoming, serves 240,000 customers while
we serve just under 3,000. But even given their economies of scale, the
price we are charging is in line with what other natural gas
distributors are finding it necessary to charge for their gas service.
Lower Valley Energy is
a cooperative utility that has met the local energy needs of our members
for over 68 years. Once again, we dislike raising rates – ever. In the
long term however, we believe wholesale gas rates will stabilize in the
$5.00 -$7.00 per Mcf range. While this is still over double the $2.00
per Mcf gas we began with 8 years ago, it is substantially better than
the $12.00 per Mcf wholesale prices we are currently experiencing.
Please contact Lower Valley Energy at any time if you have questions
about natural gas or any other concern. It is a privilege to serve your
energy needs.Return to previous page
|
