Tribune-Review: Natural gas price drops tied to mild weather, Marcellus shale output

By Thomas Olson and Rachel Weaver

Area residents can thank warmer-than-normal temperatures, as well as the gas produced from Marcellus shale deposits, for cuts in their heating bills in early 2012.

Two of Western Pennsylvania’s three biggest natural gas utilities filed cost adjustments with regulators on Friday that will drop the average homeowner’s heating bills 10 percent to 22 percent.

“For anybody, whether they’re low-income or not, a reduction in the cost of utilities is always helpful, especially in this economy,” said Mary Sally, customer service manager for Dollar Energy Fund, a Pittsburgh nonprofit agency that assists people with paying utility bills.

Columbia Gas of Pennsylvania’s cost adjustment will lower the average monthly bill by 22 percent, to $70.97 in the January-through-March period, compared with $90.44 in first three months of 2011. Columbia serves about 375,000 residential customers in 26 counties.

The utility said the figures are based on a typical user’s monthly consumption of 6.7 thousand cubic feet, or mcf. The total bill includes Columbia’s service and distribution costs.

Equitable Gas’ new cost adjustment filed with the state Public Utility Commission will result in a 10.3 percent cut in an average bill. Equitable’s customers will pay about $89.09 a month vs. $99.29 in early 2011, based on average monthly usage of 9.0 mcf. Equitable serves about 242,000 residential customers in 10 counties.

Customers of Peoples Gas, however, will get monthly gas bills increased by an average 9.7 percent over a year earlier. Their average bills will rise to $79 a month from $72 in early 2011, based on average monthly usage of 7.6 mcf. Peoples serves 325,00 residential customers in 16 counties.

Joe Gregorini, Peoples’ vice president of rates and regulatory affairs, said the increase reflects higher service and distribution rates that went into effect in June. That rate hike more than offset a reduction in Peoples’ projected cost for the gas itself for the next three months.

Customers of T.W. Gas & Oil Co. will have no change in their gas bills. T.W. Gas, a smaller utility that serves 56,000 residential customers in 10 counties, was acquired this year by Peoples Gas. T.W. Gas customer bills will average about $95 a month from January through March for using 7.6 mcf a month.

Spokesmen for Columbia and Equitable attributed the cost decreases largely to Marcellus shale natural gas pushing down natural gas prices by about 50 percent since 2006.

“We’ll see prices depressed as we continue to see Marcellus shale production of natural gas come in less expensively than production from other basins,” said Kent Moors, director of Duquesne University’s Energy Policy Research Group.

Milder temperatures this winter are a factor, but temperatures are expected to plunge early next week, said Accuweather meteorologist Bob Smerbeck.

“Prices come down because excess gas is not being used, but it will be used in the next several days,” he said.

Charlie Woodrum, a meteorologist with the weather service in Moon, estimates there’s a 40 percent chance that January temperatures will be above the normal average of 35.7 degrees. He also projects a 30 percent chance that temperatures from January through mid-March will be above the normal average of 41.4 degrees.

The weather and gas-supply outlook is mirrored in the futures securities markets. The price of natural gas futures fell below the $3 mark yesterday for the first time in more than two years. Gas for February delivery fell 3 cents to $2.997 per million British thermal units on the New York Mercantile Exchange at one point.

The decrease in gas costs will help agencies like Dollar Energy Fund assist more people, said Sally.

It also will help the state Department of Public Welfare’s Low-Income Home Energy Assistance Program, said spokeswoman Carey Miller. The program offers cash grants for heating bills, with the money sent directly to the recipient’s utility company, and crisis grants for emergencies that leave residents in danger of being without heat.

Kathy McQuillan, 41, of Oakmont said that in the winter, her gas bill from Equitable sometimes can be almost what she pays in rent, around $400. Keeping up with bills can be a challenge right after the holidays, she said.

“I’m thrilled,” she said of a potentially lower gas bill.

Andrea Cartwright, 46, pays an average of $100 a month to heat her White Oak home through Equitable and uses space heaters in some of the more chilly parts of the house.

She said the projected decrease in gas costs is “absolutely” a good thing, particularly in light of news that property assessments are expected to rise in Allegheny County.

“Finally, this is some good news,” she said.

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