Heating bills predicted to rise up to 25%

NiMo expects average home's winter cost could rise from $625 to $745

By KENNETH AARON, Business writer  First published: Friday, October 11, 2002

Here's one more reason to hang on to summer: Niagara Mohawk expects natural gas heating bills will rise 15 percent to 25 percent this year.

The utility, based in Syracuse, said Thursday that higher gas costs and the expectation of a normal winter (that is, a cold one) were fueling its projections.

NiMo officials said a typical homeowner can expect to shell out $745 for heat this winter. Last year, when temperatures were mild and gas costs low, that same customer likely spent just $625 over the November-to-April heating season.

A winter as mild as the last one would still result in a $670 heating bill this year.

The increase was in line with a U.S. Department of Energy statement last week predicting that natural gas users will see a 19 percent increase in their heating bills this year, while oil customers can count on a 45 percent jump.

"We can't predict with accuracy," acknowledged Joseph T. Ash, NiMo's vice president of gas delivery, on the preseason outlook. "We think it's important to give our customers an alert."

NiMo, a subsidiary of the U.K.-based National Grid Group plc, has 253,000 gas customers in its Eastern Division. Most of those customers are in the Capital Region.

Ash said most of the increase, 10 percent to 15 percent, would come from higher gas usage resulting from colder weather. While in a normal winter a typical residential customer would burn 952 therms of gas, that same person used just 810 therms last year.

The rest of the increase, 5 percent to 10 percent, would come from higher gas costs, which NiMo passes straight through to its customers. The utility doesn't line its pockets with any of that rise.

If the projections are accurate, bills still won't get as high as they did two winters ago, when the typical homeowner shelled out $1,000 in heating costs.

Natural gas customers of Poughkeepsie-based CH Energy Group Inc. can lock in gas prices at 64 cents per 100 cubic feet. Last year, the utility's offer -- 60 cents per 100 cubic feet -- wasn't such a good deal. Customers who chose it ended up spending about $20 more on their heating costs than those who left their bills to chance.

Two years ago, though, the fixed-price deal saved the typical user $42.

New York State Electric & Gas of Binghamton, another utility serving the Capital Region, did not specify whether it expects costs to rise this winter when asked Thursday.

NiMo was able to make its prediction based on weather reports and today's cost of natural gas, which is traded as a commodity. On Thursday, natural gas for November delivery cost $3.83 per million British thermal units on the New York Mercantile Exchange. Last year at this time, it cost $2.48 per million BTUs.

NiMo buys some of its gas in advance at low prices and stores it for use in the winter. As the winter wears on, it buys more, generally at higher prices, because as demand rises so does price. So if temperatures are exceptionally cold, NiMo's predictions could be off.

Federal officials, though, said natural gas supplies at the end of September were at their highest levels in 11 years, providing a cushion against bad weather.

A cold winter also could send more people seeking state help to pay their heating bills, said Michael Hayes, a spokesman for the state Office of Temporary and Disability Assistance.

Last year, the state distributed money under the Low Income Home Energy Assistance Program to 658,510 households. In the 1999-2000 winter, though, when it was colder, 697,465 households received help.

The annual program, which distributes grants of $150 to $400 to those eligible, began accepting applications on Oct. 1.