Aid available for gas hike

With natural gas costs expected to increase 50 percent to 70 percent this winter, property owners who rely on natural gas for heat will definitely feel the price crunch in coming months.

City Utilities Sept. 21 addressed the increase with a program approved in its last meeting of the Board of Public Utilities. The Heating Expense Leveling Program, or HELP, will defer the price of natural gas when it exceeds a designated threshold of 50 cents per therm during the four months beginning in December.

Any costs deferred would then be calculated into the recovery adjustment factor during April through September 2001 time period. The program would have its biggest impact should natural gas prices skyrocket above the 60-cent per therm level, according to CU.

Natural gas prices began rising a few months ago and are already about 65 percent higher than last year. The September purchased gas adjustment was 52 cents per therm, compared to the 33 cents per therm natural gas customers paid in September 1999, according to CU. CU also predicts $2-per-month-higher electric bills this winter, based on the electric fuel adjustment factor approved by the board.

"A couple of months ago, when gas prices started to rise and didn't look like they were going to fall anytime soon, CU started talking about what we could do to help customers. This program evolved from those discussions," said CU Senior Manager of Pricing Cathy Meyer.

Meyer said CU has offered payment programs in the past, but HELP differs from any other program in that its purpose is to protect customers from unexpected spikes in prices.

"Back in the early 80s, when gas prices began going up, we didn't have to protect against unanticipated spikes in prices. This program is a little different in that regard," Meyer said. "We know that prices are going to be higher, but we don't know at what level they could end up being. We don't want our customers facing the problem of not having any idea as to how high they could go," Meyer said.

All natural gas customers, with the exception of 31 industrial customers, classified as curtailable, would be covered by the plan. Meyer said curtailable customers are large customers that have an alternate source of fuel.

"On the coldest days, we can interrupt their supply of gas and they will burn an alternative source of fuel. They get a price break for that," Meyer said.

Forest Glen Apartment Homes' Manager David Honeycutt said Forest Glen, located at 2072 E. Bennett pays natural gas heating costs for its 144 units and plans to take advantage of HELP.

"We're in contact with City Utilities and we're going to try to get some of the level billing this winter so we can offset those costs," Honeycutt said. "We average about $40 per month per apartment for natural gas, and we did a study about a month ago that projects those bills to go up to about $72 per month per apartment this winter."

Honeycutt said Forest Glen does not plan to raise rent at this time to cover the higher gas costs, but that a spring meeting is planned with the complex's owners in Indianapolis, Ind. to determine if a rent increase is necessary to cover the costs incurred this winter.

Old Monterey, the largest apartment complex in Springfield with nearly 800 units, also covers tenants' natural gas costs. The complex's parent company, Edward Rose & Sons in Kalamazoo, Mich., paid more than $100,000 in natural gas costs for Old Monterey tenants last year, according to Gary Hosmer, who is the utilities manager for Edward Rose & Sons' 50 properties.

Old Monterey is heated with natural gas, but Hosmer said because natural gas heating costs are weather-driven, Missouri's unpredictable weather doesn't allow for certainties when predicting those costs.

"The price may be higher, but if there is a warm winter, we'll use less of the commodity. There are really a lot of factors involved," Hosmer said.

He said Edward Rose & Sons has been dealing with the hike in natural gas prices all summer at most of its properties and plans to see the higher prices through without raising rent to cover the costs.

"Natural gas is only a portion of our operating expenses this is a temporary situation. I don't think that (higher prices) will last very long, and in a situation like this, higher natural gas wouldn't be the only factor contributing to a rent increase," Hosmer said. "It's a national issue and something we're dealing with companywide."