As temperatures falling, gas prices rising

Posted: Wednesday, November 08, 2006

Almost as certain as cold temperatures visiting Alaska every winter, the price of natural gas is expected to go up again.

Residential and commercial customers of Enstar Natural Gas Co. could be paying higher energy bills come January, if the Regulatory Commission of Alaska approves a rate increase sought by the gas utility.

Enstar filed a tariff revision request last week proposing to increase its gas cost adjustment (GCA) rate from $5 per thousand cubic feet of gas to $7.03 per thousand, effective for billings issued on or after Jan. 3.

The hike reflects price changes in long-term supply contracts Enstar has with its suppliers.

When the natural gas utility raised prices for 2006, the hike was explained on the company’s Web site as having two primary contributors.

First, the company site said, about 53 percent of Enstar’s supply in 2006 will come from its older contracts that are priced in relation to crude oil market prices, which are up over 32 percent from 2005. Second, Enstar planned to increase its purchases under the Unocal contract that started deliveries in 2004. This contract uses a Lower 48 market-based price, a 36-month average of the natural gas future prices, which have averaged about $6.19 during that period — up about 34 percent over the 2005 price.

Each of these items was responsible for about 50 percent of the increase in the GCA.

The average residential customer will see an increase of about 30 percent, or $30 a month next year, according to Enstar, if the rate increase is approved.

The increase is due to the market price changes that have increased the cost of natural gas. The average small commercial customer increase will be 29 percent and the average large commercial customer will see a 31 percent hike.

In a press release about the increase, Enstar spokesperson Curtis Thayer said, “This increase reflects the overall rise in energy prices ... and crude oil prices ... under Enstar’s long-term contracts with suppliers.”

Thayer suggested consumers lower their thermostats and caulk windows and doors to conserve energy to “manage the effect of these market price increases on their utility bills.”

On Monday, Thayer said, “People can write to the Regulatory Commission (of Alaska), but they already approved the contracts which have pricing mechanisms included.

“The index period was June, July and August and the next indexing period will be next summer,” he said.

Thayer said the only hope for a decrease in the rate would be if the price index is down next summer.

He also said Enstar had depended on 7 percent of its natural gas supply coming from Aurora Gas for Cook Inlet fields, but “Aurora claimed it was uneconomical to supply us.”

Thayer said Enstar has filed a lawsuit against Aurora, and if Enstar prevails, any cash settlement would be returned to Enstar customers.

People having trouble paying their natural gas bill this winter can call Enstar for help in connecting with assistance agencies or to develop payment plans for eligible customers. The number in Soldotna is 262-9334.

Phil Hermanek can be reached at

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