Capital News Service

of the Michigan State University School of Journalism

Natural gas prices down, electricity prices uncertain

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By NICK MORDOWANEC
Capital News Service

LANSING – While electric rates are yet to be determined, lower natural gas prices may help Michigan residents keep more money in their pockets this winter.

The state’s Public Service Commission (PSC) announced that natural gas prices are decreasing, but rates for electricity are still uncertain.

The PSC’s projection is based on an annual winter energy appraisal to determine what customers should expect to pay for heating in a given season.

“It is good news for customers,” said Judy Palnau, public information officer for the PSC. “We are looking at a normal to slightly-warmer-than-normal winter this year, as opposed to being slightly colder than normal.”

Palnau said natural gas rates are expected to be 12 percent lower than last winter, and if outdoor temperatures are at or above normal, bills could drop as much as 16 percent.

“A typical residential customer’s bill consists of 70 percent natural gas, and we make no profit on natural gas,” said Jeff Holyfield, news and information director of Consumers Energy. “And if you look where we’re at today, the price of $7.40 per thousand cubic feet is down 9 percent from last winter’s price of $8.17. The total bill overall is down $3.”

Consumers Energy, based in Jackson, charges in the bottom third among utilities nationally for gas.

MichCon, a gas supplier regulated by the PSC, said that it has not received a rate increase in nearly five years due to strong cost controls and other forms of revenue. The company’s 2009 bills are expected to be 5 percent lower than last year.

There’s a wait-and-see approach, however, on the rate for electricity.

Since Michigan utility companies are allowed to increase rates without first getting approval and did so last year, Consumers Energy has been ordered by the PSC to issue refunds. A total of $20 million in refunds are expected to be sent to customers in January.

Holyfield said, “Because the economy is down and consumers needing energy has gone down, prices have gone down as well. At the end of the day, a customer’s overall feeling is, ‘What is my bill going to be?’”

And while prices for electricity and gas seem to be heading in different directions, customers are benefiting more this year than last, according to Palnau.

“Prices have been rising recently, but falling over the last year,” Palnau said. “Demand has been falling and supply has been high.”

With such changes in energy prices taking place, low-income families are being offered a little more room to make payments.

Palnau pointed to a “winter protection period,” during which customers with budget constraints can avoid having their heat shut off if they follow the rules of the plan. The plan runs from Nov. 1 to March 31. It is a joint effort between the PSC and utility companies.

Holyfield said, “We have a variety of programs helping low-income customers and senior citizens in need. We work closely with state and local officials. More and more customers are calling with issues about paying bills, like those who are unemployed and need assistance.

“We tell them how to qualify and encourage customers to work with Consumers Energy when they have trouble paying off bills. We also want customers to tell us immediately if there’s a problem,” he said.

Holyfield said renewable energy and more efficient resources present great opportunities for the state in the next decade. For example, he described a plan to meet electricity needs for 1.8 million customers in the next 20 years by improved energy efficiency and expanded use of renewable energy.

He also said building new clean coal plants is a top priority because many existing plants are deteriorating and not conducive to energy-saving methods.

“The average age of coal plants is 50 years old. Some existed when Truman was president,” he said.
Holyfield said the goal of Consumer’s Energy is to reduce electricity use by 5.5 percent and natural gas by 8 percent by 2015. He said the only way to achieve that goal is to inform customers of energy efficiency and to invest in forms of renewable energy.

© 2009, Capital News Service, Michigan State University School of Journalism. Not to be reproduced without permission.

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