Tuesday, February 25, 1997

Yikes! Is this a mistake or really my gas bill?

By CLIFF EDWARDS AP Business Writer

CHICAGO (AP) - Sharon Brown did a double take after opening her February gas bill.

"The price went from $39 on the (monthly) budget plan to $73. I thought they'd inverted the numbers," the Philadelphia woman said. "They said they had to raise it, but that makes no sense because I'm not using any more than I did last year."

Consumers across much of the nation are suffering sticker shock as they get sharply higher gas bills from utilities in spite of a relatively mild winter.

Soaring heating oil prices early this winter drew national attention, while prices for natural gas quietly surged to all-time highs amid concern there would not be enough supply to last through the heating season. Natural gas heats 54 million, or the majority, of American homes.

Utilities have responded by raising rates as much as 50 percent, prompting a barrage of complaints and even public hearings.

Missouri Attorney General Jay Nixon scheduled a hearing Tuesday with industry suppliers and distributors. The Illinois Commerce Commission has asked the state's gas utilities to account for their increases. New Mexico's Public Utilities Commission ordered rates lower, and New York state lawmakers scheduled hearings this week to investigate the price spikes. Similar hearings recently took place in Alberta, Canada.

Natural gas futures prices soared in late December to about $4.50 for each 1,000 cubic feet, up from $2.80 a year earlier. Prices have since fallen sharply after supply worries proved unfounded, but many consumers won't see that immediately reflected in their bills.

The culprit for the increase was unusually cold weather last winter. Stored supplies were virtually depleted, and utilities were forced to pay more during the summer to replenish inventories. Prices then rose even further as below-normal temperatures gripped much of the country through the fall and early winter.

Typically, about a third of the price of the monthly gas bill is attributed to natural gas costs, which are passed on to consumers.

"We've placed inserts into the bills to tell customers that this is a circumstance that we have virtually no control over," said Ed Joyce, a spokesman for Peoples Gas, a northern Illinois utility. "It's become that we're really the bearer of bad news, but it's rising commodity costs that are passed on dollar-for-dollar to the consumer."

Clarence Washington saw a $300 prepayment for this season's gas bill quickly disappear in heating his four-bedroom home in Sicklerville, N.J. Now, he's digging into his pocket to pay bills getting larger by the month.

"Every time you read the bill and write a check, you think 'Wow! Do we really use that much?' " he said. "It seems you're at the mercy of utilities all the time. There should be some in-home system of monitoring how much your bill will be."

Some local and state regulators have joined in the criticism.

Tennessee regulators last week acknowledged price hikes there were legitimate. But they chided gas companies for trumpeting price reductions while doing little to inform customers when increases are coming.

And regulators in New Mexico said the Public Service Co. gas utility "deliberately filed false information" that understated expected price increases. They ordered the company to forgo collecting $1.5 million from consumers.

Gas prices were deregulated in the mid-1980s, and rules were eased even further in 1992 to allow utilities and gas marketers to put less gas in storage. That helps companies avoid high storage costs but can produce volatility during times of great demand.

The American Gas Association, an industry group, says many companies buy on the spot market to avoid dipping into storage until the traditional January-February peak demand period.

"No one likes to pay more for anything, but gas utilities have no control over the weather," said AGA spokeswoman Peggy Laramie. "While it's no consolation, the good news is that it eventually all balances out."