Enstar predicts price hike

Natural gas could cost customers 19 percent more

Posted: Monday, November 14, 2005

A predicted hike in natural gas prices to Enstar customers next year has settled in at about 19 percent.

Enstar filed a tariff revision with the Regulatory Commission of Alaska seeking to increase the cost of gas from $3.93 per thousand cubic feet to $5 per thousand cubic feet.

An Enstar spokesperson said the average home in Alaska uses 177,000 cubic feet of natural gas a year, and residential customers can expect to see an average increase of $194 in 2006.

Curtis Thayer, director of public and government affairs for Enstar, said the jump reflects the increase in the cost of gas Enstar purchases from its suppliers.

“We have four contracts, which have already been approved by the RCA,” Thayer said.

“Once a year, we go back, when the calculations are complete, and we file for a tariff revision.

“Essentially the regulatory commission checks our math,” he said.

The RCA is expected to issue its ruling on the increase in mid-December, and Thayer said Enstar anticipates it will be approved.

The four already approved supply contracts are known as the Beluga, Moquawkie, Mara-thon and Unocal contracts, either for the location of the gas field, as in the two former names, or the production company, as in the latter.

Thayer said the Beluga and Marathon contract prices are indexed directly against crude oil prices, the Moquawkie price is indexed against inflation and the Unocal contract price is indexed against the Henry Hub index, a Louisiana-based pricing index.

According to an Enstar news release, its proposed rate increase is based on the wholesale cost of natural gas. Enstar does not mark up the cost.

Enstar profits from the delivery of natural gas through its pipeline system, which is regulated by the RCA, the news release stated.

The rate Enstar charges for delivering gas to residential and commercial customers has remained unchanged since 2003 and is expected to remain flat through next year.

Thayer said the delivery rate to residential customers is $1.70 per thousand cubic feet.

He said the combined gas cost and delivery rate in Southcentral Alaska — $6.70 — is the lowest gas price in the United States.

“The U.S. average is $15.58 delivered,” he said.

The average increase to Enstar’s residential customers will be about 19 percent; the increase to small commercial customers will be 18 percent; and large commercial customers will see a 20 percent increase.

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