The heat is on

Natural gas prices are expected to increase as much as 77 percent in the Midwest, according to U.S. Energy Information Administration estimates.

City Utilities Pricing Director Ray Ross said one of the major reasons for the cost increase is a source hundreds of miles away – the Gulf Coast.

“The Gulf supplies about 20 percent of the nation’s natural gas, and since Katrina we haven’t gotten back all of that in production – 30 percent of (the Gulf’s production) is still what we call shut-in‚” Ross said. “That’s 6 percent of the nation’s supply.”

Combined with a prolonged warm summer season, which increases demand by utility companies for gas needed to create energy for customers, CU customers in November paid 75 percent more than they paid in November 2004.

Next year’s prices, Ross said, probably will be “somewhere between 20 (percent) and 50 percent higher than in 2005,” assuming an average or milder-than-average winter.

A severe winter would drive prices upward based on demand, he added.

Area businesses are trying to figure out how to deal with the higher prices – and what, if anything, can be done to stem the rising tide.

“We’re trying to figure out if this is an isolated incident or if it’s happening across the country, and unfortunately it looks like it’s happening across the country,” said Rita Needham, executive director of the Southwest Area Manufacturers Association. “If it continues at this rate, (companies) could go out of business. Nobody’s going to be able to withstand that kind of an increase in price for very long.”

For instance, Diversified Plastics Corp. of Nixa, which uses natural gas in its manufacturing process, has watched its natural gas bill triple from $40,000 in October 2004 to nearly $120,000 in October 2005, according to Needham.

Diversified Plastics President Ken Magers declined to comment on the company’s situation, citing uncertainty over possible state action in the situation. Magers said he did not want to jeopardize a potential meeting with Missouri legislators. SAMA also would be a part of that meeting.

“I think what we’re hoping to do is make our legislators and key officials on the state level aware of what’s happening, and see if there’s anything that can be done at a state level,” she said, adding that no date has been set.

Ultimately, Needham said significant changes would have to come from the federal level.

The U.S. average price for natural gas is about $13 per million British thermal units (Btus) used. That price, Needham said, is equivalent to paying $7 per gallon for gasoline.

Needham said those prices already have cut jobs across the country: 100,000 in the chemical industry and 146,000 in the forest and paper industry after 200 mills closed.

“Congress is going to have to get some backbone and pass some new energy legislation,” Needham said. “I’m just perplexed by the lack of response we’ve been getting from the people who’ll have to make those decisions.”

The alternatives

The rising costs are putting even more emphasis on nontraditional energy forms.

Joplin-based Empire District Electric Co. (NYSE: EDE) currently has no natural gas service, though the company has filed for Missouri Public Service Commission approval to acquire the natural gas operations of Aquila Inc., which supplies more than 48,000 customers in north and west Missouri. The $84 million Aquila acquisition is expected to finalize in mid-2006.

But the utility is looking at more than natural gas. Empire began receiving energy from PPM Energy’s Elk River wind project near Beaumont, Kan., in October. The project consists of 100 wind turbines that provide up to 550,000 megawatt-hours of annual energy to Empire’s customers. That’s enough energy to power about 42,000 homes.

Amy Bass, director of corporate communications for Empire, said the wind energy is not separate from the utility’s other energy sources.

“Some utilities might have a system where you can sign up to get green energy and pay a premium for energy from their wind projects,” Bass said. “We don’t have that. The energy from our wind project will flow into our system and will be distributed to all of our customers. It’s just another source.”

CU has had a premium-priced wind energy program called WindCurrent since 2000. Customers who sign up for the program, which utilizes wind energy purchased from Westar Energy in Topeka, Kan., can purchase 100-kilowatt blocks of power for about $5 – about twice the typical rate.

CU’s TecHouse, 2655 S. Blackman Road, has been testing the effectiveness of wind and solar energy since 2003. That program, however, is not of sufficient size to provide energy to the general public; one wind turbine and two solar panels in east Springfield provide only a portion of the electricity demand for just the TecHouse.

CU also has begun the process of examining energy use and efficiency issues. The utility has hired Frontier Associates of Austin, Texas, to evaluate and recommend energy conservation and management possibilities. The contract with Frontier will not exceed $225,000.

That announcement, made at CU’s November board meeting, comes at the same time the company is gathering information on a second coal-fired power plant in southwest Springfield. An earlier coal plant proposal failed at the polls.

A public meeting is scheduled for noon Dec. 13 at the CU offices, 301 E. Central, according to CU Communications Director Ern DeCamp. DeCamp added that no recommendations will be made at the informational meeting.

Customer rates

According to City Utilities, the average Springfield customer uses 78 therms of natural gas per month over the course of a year, while the average per month in the winter is 183 therms (one therm equals 100,000 Btus). The combination of increased winter usage and higher winter costs, shown below for 2005, can make for a scary heating bill.

June: $0.6190

July: $0.8168

August: $0.8006

September: $1.0058

October: $1.4386

November: $1.7189

December: $1.3707

Note: All residential customers also pay a $7.50 base charge per month; the commercial and industrial monthly charge is $25.

Want to save on your heating bill?

• Turn off lights and appliances when they’re not in use.

• Turn down the thermostat – average customers save 3 percent to 5 percent for each degree.

• Open window coverings on the sunny side of the home to gather sunlight.

• Clean your furnace system and check the ductwork for leaks.

• Caulk windows, and caulk and weather-strip doors.

• Install a water heater blanket.

• Install a programmable thermostat.

Sources: Empire District Electric Co. and City Utilities

Click here to read about how one local company is helping reduce dependency on traditional energy sources.

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