High prices, cold weather hit home for gas customers

Coming to a home near you this month: Massive, oversized beasts … screams of terror … tears … pathos … hand-wringing.

Lots and lots of hand-wringing.

The latest "King Kong" movie? Nope. It's your natural gas bill.

With wholesale prices near an all-time high, natural-gas users already were in for a rough winter. Then the bottom fell out of the thermometer.

The result, according to Northwestern Energy spokeswoman Claudia Rapkoch, was a "double whammy" that sent December heating bills through the roof.

"We're getting a lot of calls from people wondering why their bills are so high," Rapkoch said. "It's something we're seeing across the Northern Tier. The bitterly cold temperatures were problem number one. Natural gas prices are also very high right now."

Record low temperatures were set in the Flathead four times in the last month, according to National Weather Service data, including 19 below zero on Dec. 7 and 18 below on Dec. 19.

Even without the record cold, temperatures here only rose above freezing a handful of times between Thanksgiving and Christmas.

At the same time, Rapkoch said, natural gas prices are 40 to 50 percent higher now than they were a year ago.

"Together, that created a double whammy," she said. "It's really a shock to the system when the bills show up in the mailbox."

The December bills for some customers were reportedly twice what they were just a month ago and 50 percent or so higher than last December.

"We've known for some time that this could happen," Rapkoch said. "We didn't know what the weather would be like, but we knew prices would be high. We tried to get the word out to customers that this was a possibility."

Northwestern held a series of clinics in Montana in October, during which it distributed several thousand free weatherization kits.

Another round of clinics will be held in February, Rapkoch said, although no dates have been set yet.

The company also set aside $1 million this year for a new energy "challenge grant" program, which will provide heating assistance to people who meet income criteria.

Information about the grant, as well as other billing and energy-saving programs, can be found on Northwestern's Web site, www.northwesternenergy.com

Rapkoch noted that Northwestern doesn't make a profit from its natural-gas sales. The price it pays for the commodity is passed straight through to customers, without any mark-up.

"The delivery of that gas is where Northwestern makes its revenue, and our delivery rate hasn't changed since 2000," she said.

Unlike electricity rates, which are typically stable for extended periods, the price customers pay for natural gas fluctuates from month to month. This stems partly from the nature of the market, and it's partly due to more recent trends.

"The natural-gas market is very different from the electrical market," Rapkoch said. "While there are a limited number of power generators, there are more than 6,000 natural gas producers in North America."

Northwestern has supply contracts with several producers, she said, but the price is typically set at a trading hub.

"It's no different than any other commodity, like wheat or beef," Rapkoch said. "The price depends on the number of buyers and sellers, and in recent years prices have been very volatile."

Historically, natural gas prices spiked in winter and dropped substantially in summer, she said, reflecting similar cycles in consumer demand.

Given that trend, "we could buy gas in summer when prices were low, inject it into a storage tank and draw it down in winter," Rapkoch said. "That had a significant dampening effect on the average annual price."

More recently, however, new markets and increased demand for natural gas have eliminated the summer low. Demand - and therefore prices - is staying high throughout the year.

"Natural gas is no longer just a heating fuel," Rapkoch said. "This past summer, demand was higher than it was last winter."

Most forecasters expect the market volatility to last for at least another year, she said.

That volatility will continue to hit home here next month: During Northwestern's next billing cycle, which began on Dec. 16, natural-gas prices will be 14 percent higher than they were for the December bills.

Reporter Bill Spence may be reached at 758-4459 or by e-mail at bspence@dailyinterlake.com