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Natural gas price will go up this fall

Colorado Springs residents who heat their homes with natural gas should brace themselves for higher utility bills this winter.

Colorado Springs Utilities expects to raise the average residential utility bill by 9 percent to 13 percent this fall -- and about half that increase will be to pay for increasingly expensive natural gas.

The benchmark price of natural gas was $2.32 per million British thermal units in 1999. As of Thursday, the cost was $6.19, although Colorado Springs and Western states have a price of $5.35 because of difficulties transporting natural gas out of this region.

Many experts, including Wayne Vanderschuere, resource supply manager for Colorado Springs Utilities, expect natural gas prices to remain high for the next four to six years, as demand outstrips production.

That has implications for local residents.

The utility expects that rate increases this fall, if approved by the City Council acting as the Utilities Board, will send the average residential customer's bill higher by $22 to $23 a month.

About half of that is the utility simply passing along higher fuel costs.

That's on top of a similar increase last fall. Those increases are meant to recoup what the utility paid for the gas that went directly to consumers and the gas used in city power plants to produce electricity.

Vanderschuere said a number of factors drive the increase in natural gas costs:

c Old, established gas fields are starting to play out, so exploration companies have been moving to fields, including those in Colorado, that are less accessible and have lower yields. That raises the cost of extracting the fuel. In addition, new technologies allow exploration companies to drain fields of gas more quickly.

c In the 1990s, utility companies began a wholesale switch from using coal to generate electricity to using natural gas. Natural gas is cleaner than coal; gas-fired electrical plants are cheaper to build, and natural gas can be used twice in the electrical generation process, making it more efficient.

c The increase in demand came at a time when the industry was already predicting a 50 percent increase in demand for natural gas in the next 20 years.

c The same companies that explore, buy and sell oil also dominate the natural gas market, so prices of the two fuels tend to rise and fall at the same time -- and oil has been rising steadily.

Some analysts predict that prices for the fuel will drop significantly at the end of the decade.

Vanderschuere isn't so sure. He said importing natural gas from troubled regions of the world raises the same kinds of concerns long expressed about oil.

New technologies are emerging that allow coal-fired electricity plants to operate more efficiently and cleaner, he said. Denver- based Xcel Energy, for example, has decided to use coal when it expands its Comanche Power Plant in Pueblo.

There is an estimated 250- to 300-year supply of coal in Wyoming alone. Coal costs about $1 per million British thermal units. Even with the additional handling costs of getting coal to a plant and possible environmental surcharges in the future, that price makes coal attractive.

Vanderschuere predicts Colorado Springs Utilities will use coal when it builds its next major electrical generating plant, possibly in the next 10 years.

The utility already produces 70 percent of its electricity using coal, mostly mined in the Craig area and shipped here by rail.

Still, none of that will help the majority of residents who use natural gas to heat their homes.

Vanderschuere recommended that customers look at their own habits and investigate energy-efficient appliances such as fluorescent lighting to achieve an overall reduction in their utility bills. The electrical wall switch, he said only half-jokingly, is the greatest energy saver in a home.

The utility offers rebates, some substantial, for such things as insulation, programmable thermostats and high-efficiency furnaces, clothes washers, doors and windows.

Still, he conceded, embracing energy efficiency may not take the sting out of higher gas prices when February's freeze hits the city.

"In the good years, no one really notices," he said. "Unfortunately, in some years, you just can't get away from it."

CONTACT THE WRITER: 636-0197 or mckeown@gazette.com

EASING THE CRUNCH

With utility rates expected to rise this fall, driven in part by higher natural gas costs, city-owned Colorado Springs Utilities is urging customers to make their homes more energy-efficient. To investigate various rebates designed to save water and energy, read tips on conserving energy and complete an energy audit of your home, visit www.csu.org.