Wednesday, October 20, 2010

Natural gas prices drop

Annual adjustment lowers rate for 4th time in 5 years

Express Staff Writer

Those using natural gas for water and space heating are now paying about 90 cents less each month because of Intermountain Gas' annual rate adjustment, initiated Oct. 1.

About 77 percent of Intermountain's customers use natural gas for both water and space heating. Those only space heating with natural gas have received a 0.2 percent increase, about 9 cents more per month for the average customer.

Gas rates fluctuate every year because of something called a "purchased-gas cost adjustment." Simply put, rates are increased or decreased to match predicted wholesale prices, as well as the costs of transportation and storage.

The Idaho Public Utilities Commission only allows revenue from a yearly rate adjustment to go toward meeting expenses. The money cannot be used to increase earnings.

The commission approved Intermountain's request this year for a $2.2 million decrease in annual revenue, meaning a rate decrease, because of a declining demand for natural gas, ample storage and lower-than-normal wholesale gas prices.

The price drop is the fourth in five years.

However, prices have slightly increased for customers using natural gas to only space heat because the lack of growth in this customer class can't offset projected costs.

This annual cost adjustment is one out of two components determining gas rates. The other half is a base rate to cover fixed costs that remain mostly constant. Common fixed costs include workers' salaries, rent and the price of operating facilities and equipment.

Trevon Milliard:

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