Another Dan Gearino Post in the Columbus Dispatch

(c) 2009 F. Bruce Abel

He's my go-to guy on aggregation in Ohio now.



Natural-gas price drop will cut heating bills
Thursday, December 17, 2009 4:51 PM
(Source: The Columbus Dispatch, Ohio)By Dan Gearino, The Columbus Dispatch, Ohio
Dec. 17--January's heating bill might seem like a late holiday gift for Columbia Gas of Ohio customers.
The price of the natural gas itself will drop to the lowest level since 1999, leading to a projected savings of $85 that month for a typical household, the company said yesterday.
A typical residential customer is expected to pay $114.61 for the month, down from $199.84 a year ago. Those figures include taxes and fees.
The commodity cost -- the largest component of the bill -- will be 41 cents per 100 cubic feet of natural gas, down from the current price of 49 cents.
"That's good news for consumers," said Ohio Consumers' Counsel Janine Migden-Ostrander, the state's consumer advocate for utility issues. "At a time when utility rates are rising in other industries, it's good to see that natural-gas prices are getting lower."
January is often the most expensive month for gas customers, so the low price couldn't come at a better time.
Prices have fallen for a variety of reasons, including reduced demand from businesses and an increase in supplies from domestic sources.
"We've really been producing more than we've been consuming for quite a while now," said Chris Lafakis, an economist specializing in energy issues at Moody's Economy.com. He credits the use of new technology, such as horizontal drilling, for helping companies extract more gas.
Another factor helping local customers is an impending change in the way Columbia obtains its gas. In anticipation of the shift, Columbia is changing the way it accounts for certain costs. The effect of that technical change for consumers is that the January price is lower than it would be otherwise, said Columbia spokesman Ken Stammen.
Starting in April, the company will switch to an auction system for buying gas, allowing outside providers to bid for the right to sell to Columbia's customers. The process, approved by state regulators this month, will be at the wholesale level, so customers aren't likely to notice.
Residents need to go back to April 1999 for a price as low as January's. Then, it was an identical 41 cents. The last time it was lower was July 1998, when it was 36 cents.
At the other extreme, the price hit a record high of $1.43 in the summer of 2008, right before the bottom fell out of the economy and commodity prices.
Stammen declined to speculate on what might be in store for February.
"We don't know if this is the bottom or not," he said.
dgearino@dispatch.com