A break for budgets: PSE slashes natural-gas rates
By Ángel González
Seattle Times

If you heat your home with natural gas, here's some news to warm up to: The price will go down for the first time in five years, as Puget Sound Energy cuts its rate by 13 percent starting Monday. The cut, approved Wednesday by the Washington Utilities and Transportation Commission (WUTC), comes as the region prepares for the cold and dreary nights of winter. The average natural-gas bill for a residential customer will drop by $11.27 to $82.12 a month, according to the WUTC.

The impact will be widely felt. Some 44 percent of homes in the Seattle-Bellevue-Everett metro area burn natural gas for heat, and Puget Sound Energy (PSE) is their sole provider. Residents who heat with fuel oil won't be so lucky. Oil prices are expected to rise about 7 percent on the West Coast, according to the U.S. Energy Information Administration (EIA). Given the volatility of energy markets, nothing guarantees natural-gas prices won't rebound when PSE revises its costs again next year.

"I only wish I could guarantee that these wholesale prices will stay low in the future," WUTC Commissioner Pat Oshie said in a statement. The recent lower wholesale prices are a result of several factors:

--Relatively mild summer temperatures meant low air-conditioning loads for utilities, which used less natural gas to generate electricity.
-- No major supply disruptions like those hurricanes Rita and Katrina caused in 2005.
-- Record imports of liquefied natural gas, and more production in the Gulf of Mexico and the Rockies. The EIA expects natural-gas production in the United States to increase 0.7 percent in 2007 and 1.3 percent next year.

PSE, Washington state's largest energy utility, is required to pass these savings on to customers.
The company, like other state-regulated utilities, adjusts its rates once a year to balance its costs with the prices it charges. Should there be a major increase in natural-gas prices — due to extreme cold this winter, or a killer hurricane late in the season — consumers won't see the effect until next year.

Electricity

For area residents who heat their homes electrically — 45.6 percent of the total — rates will go up or down depending on whether they live in Seattle or its suburbs. Seattle City Light cut its 2007 and 2008 rates for residential customers by about 8 percent Jan. 1, said spokesman Peter Clarke. The drop is due to its reliance on abundant hydropower and the improvement of the company's finances, which were badly hurt after an energy crisis at the start of the decade.

PSE, which supplies electricity outside the city of Seattle to people in 11 Washington counties, raised its rates 3.7 percent Sept. 1, bringing the average monthly bill up to $91.31. The boost was approved to help the utility recover money spent on higher power-supply costs, such as the purchase of a gas-Klickitat County gas-turbine plant.

Customers of PSE and other private electricity providers have also had another change in their bill: In June, the companies stopped applying a federal power-system credit to bills. That change increased the average bill by $10.28 a month for Puget Sound Energy customers, according to the WUTC. Private utilities seek to restore the payment of the benefit, which was suspended in May by a federal court. Meanwhile, to offset the credit's end, "we're encouraging our customers to conserve and take what steps they can to use energy wisely," said Puget Sound Energy spokeswoman Martha Monfried.

Snohomish County Public Utility District has not finished its budget process but said recently it did not expect to change electricity rates.

Oil

Homes heated by fuel oil represent less than 5 percent of the regional total and should see costs rise, according to a report by the National Energy Assistance Directors' Association. The increase is driven by skyrocketing crude-oil prices reflecting global supply concerns. Residential customers are expected to pay a national average of $1,834 for heating oil-derived warmth during the 2007-08 winter, up 28 percent from the previous year, the report says.

But the price increase will be less acute west of the Rockies, where demand is the lowest. The EIA estimates that a gallon of heating oil on the West Coast in the fourth quarter of 2007 will cost around $2.75, up about 7 percent from the same period last year. Demand here is lower due to less-severe winter weather than in the Northeast, where the bulk of heating-oil users reside.

"Here in the Northwest, the winters have been tending towards mild," said Calvin Caley, owner of Pacific Heating Oil in Seattle. The area is also less vulnerable to sharp cold snaps. "A winter that's colder is not much different anymore from a winter that is milder," he said. Typical residential customers consume between 400 and 800 gallons between September and June, Caley said. The current price runs between $3.05 to $3.15 a gallon, he said.

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