Natural Gas Prices Fuel Higher Power Bills

Natural Gas Prices Fuel Higher Power Bills

Jun 14 - Advocate; Baton Rouge, La.

As consumers brace themselves to open summer electric bills, the shock will depend on a number of factors, including their power company's dependency on natural gas and their own willingness to conserve.

Power companies in Louisiana are allowed to pass to customers the direct cost of fuel used to generate electricity.

With natural gas prices running above $6 per thousand cubic feet - compared to last summer's general range of $4.50 to $5 - that cost can't do anything but go higher.

However, major power outlets in Louisiana have different percentages of power generated by gas, which could result in wide swings in bills in different parts of the state.

Entergy Corp. officials said customers can expect slight increases in their bills while a DEMCO official said his customers will be unaffected by the increase in natural gas prices because the company uses coal.

Entergy-Louisiana, one of three service areas in Louisiana of Entergy Corp., calculates that the average bill - based upon the past six years and a hotter summer than in 2002 - will rise 5 percent from $144 to $152, Entergy spokesman Chanel Lagarde said.

Entergy-Louisiana gets 24 percent of its power from its own gas- fired generators, Lagarde said. Twenty-seven percent is nuclear generated, 3 percent comes from oil-fired generators and the rest is purchased on the open market, he said.

Because of a change in the price paid for cogenerated power, the average bill for a customer of Entergy-Gulf States, according to Lagarde, is expected to drop a bit - from $150 last summer to $142 this summer.

In Orleans Parish, Entergy-New Orleans bills will average about $147 this summer, up from $133 last summer, unit spokeswoman Amy Stallings said. Due to a recent court case, Entergy-New Orleans customers also will get an average credit of $7 per month on their summer bills.

Entergy-New Orleans, which once purchased 80 percent of its power from gas-fired plants, has dropped that figure to 40 percent, Stallings said.

"We've been able to mitigate a lot of the increase from natural gas prices," she said.

Meanwhile, about 65 percent of the power that goes to Cleco Corp.'s 264,000 Louisiana customers comes from gas-fired plants. The company did not predict how much higher bills could go.

"We generally don't calculate that because there are so many variables that come into play," Cleco spokesman Mike Burns said. "However, we do expect natural gas prices to be higher and you have to consider that we are heavily reliant on natural gas."

In addition to lowering the thermostat, utility companies recommend that customers use other conservation measures, including weather stripping, running high-load appliances at night and keeping drapes drawn during the day.

DEMCO spokesman Mark Bonner said Friday that regardless of what happens with the cost of natural gas, it will not affect the company's 85,000 customers.

Bonner said 100 percent of DEMCO's power comes from Louisiana Generating coal-fired plants. He also said the company has "fixed- fuel contracts" that will make the cost of fuel constant until 2012.

"Our fuel costs have not varied in four to five years," he said.

Bonner said that 25 years ago, natural gas was considered a better power source than coal but that has changed. He said 20 years ago, DEMCO's prices were higher than Entergy, however, today it is reversed.

Considering fears of a shortage in natural gas, Bonner said coal may be a more viable option because of its abundance. He said the only drawback to coal is environmental concerns exist in how it is mined.

Overall, it is difficult to predict which power source will be the most cost efficient in 15 years, he said.

Like DEMCO, AEP-SWEPCO, which covers the northwestern corner of the state, including Shreveport-Bossier City, relies on coal for power.

AEP-SWEPCO gets 80 percent of its power for its 170,000 customers from coal- and lignite-fired generating plants.

"We're not as reliant on natural gas," AEP-SWEPCO spokesman Scott McCloud said.

McCloud said that even though 40 percent of an electric bill consists of fuel pass-through costs, there are many steps consumers can take with "the 60 percent that they control."

AEP-SWEPCO estimates that consumption can be cut by 8 percent during the hottest months of the year by setting thermostats at 78 degrees, McCloud said. At the same time, ceiling fans and small fans use very little power, he said.

"If you're not energy efficient in the summer, your bill is going to be higher," McCloud said.

There's one wild card for virtually every consumer: How many times their power company has to go to the unregulated wholesale market to buy spot electricity to fill demand on high-usage days. Virtually all of the plants built to generate wholesale electricity over the past few years are fueled by natural gas.

"So prices there are likely to be higher," Cleco's Burns said.

Typically, the highest-usage days of the summer will occur in late July and early August, McCloud said.

Editor's note: Advocate staff writer Damiane Ricks contributed to this report.

For far more extensive news on the energy/power visit: http://www.energycentral.com .