Natural gas price hike coming
July 3, 2008 · Updated 12:47 PM
"About 3,800 North Whidbey natural gas customers will soon see a sizable increase in their monthly bills. Cascade Natural Gas, which supplies gas service to the Oak Harbor area, recently received permission from the Washington Utilities and Transportation Commission to boost its revenues by $20.5 million per year. Spread out over the company's 145,000 Washington and 41,000 Oregon customers, the increase averages out to about a 12.9 percent hike in residential bills and a 14.7 percent jump to commercial clients. This follows a rate increase of about 7 percent the company passed on to customers last December. Company officials asked for the adjustment to offset the continued climb in the cost of wholesale natural gas, which hit new highs this spring. Cascade's Jon Stoltz, a senior vice president for planning, regulatory and consumer affairs, said Monday that the increase in cost to the customer is a direct pass-through of the wholesale cost. The company, he said, makes no money in the deal.Cascade does not mark up the price of gas, Stoltz said. He explained that the company's profit is made on delivering the gas, not on the gas itself.Wholesale prices are up for a variety of reasons, not the least of which is higher demand. Not only has there been an increase in the number of residential natural gas users, but many business and industrial users are also tapping in. In addition, several electric companies are converting their older coal- and oil-powered generating plants to natural gas.Stoltz said the Pacific Northwest has benefited from low natural gas prices for many years because the only pipelines from gas suppliers in Canada came through here. Recently, however, a new pipeline from Alberta to Chicago was put into service.We had the privilege of being (British Columbia's) only customer. Now they can go east as well, said Stoltz. It's all supply and demand, and demand is up.Stoltz said there is no shortage of natural gas but that the low prices of the past caused suppliers to reduce the amount of drilling and exploration they were doing. With demand now up, he expects suppliers will start producing more product that will eventually bring prices back down.Will any price drop be passed along to customers, if it comes?Absolutely, Stoltz said. In fact, he's hoping that happens. We only make money when people use gas and if the price is too high, they don't use it.Stoltz said he wouldn't be surprised to see prices come down within a year to 18 months.Puget Sound Energy and Northwest Natural Gas, the other two gas companies in Washington, are also passing along rate increases. Homeowners served by Cascade Natural Gas will see an average increase of about $5.50 per month in their current bills. That amount will vary as use goes up and down. In other words, customers will pay a higher amount in the winter when use is at its peak and less in the summer when demand drops.Cascade offers a payment plan that allows customers to evenly spread their bills out over the whole year. Stoltz said that since this new increase is larger than most, customers who are not on the payment plan may wish to consider it to help avoid big bills this winter. "