An increase in natural-gas prices since the fall means Arkansas customers will see a jump in their utility bills this summer, company executives and a regulator said Monday.
“Commodity prices are higher than they were last October,” said John Bethel, executive director of the Arkansas Public Service Commission’s general staff.
All three natural-gas utilities serving Arkansas - CenterPoint Energy, Source-Gas Arkansas and Arkansas Oklahoma Gas - told the commission last week that their natural-gas charges from April through October will be higher than they were November through March.
Bills for CenterPoint customers will increase 6.9 percent, Bethel said. Center-Point serves about 415,000 customers in Arkansas, making it the largest natural-gas utility in the state.
The rate for SourceGas Arkansas, which has about 154,000 customers in northern Arkansas, will increase about 10.8 percent this summer compared with the charges during the past six months, Bethel said.
Arkansas Oklahoma Gas, with about 45,000 customers in the Fort Smith area, is raising its rate 13 percent, Bethel said.
Natural-gas inventories recently hit an 11-year low, one of the reasons for the price increase. Natural gas in storage fell 74 billion cubic feet last week to 822 billion cubic feet, meaning supplies are only about half what they were a year ago, according to the U.S. Energy Information Administration. Harsh winter weather also led to larger-than-normal withdrawals from inventories.
Prices for natural gas at the wellhead remain relatively low, however, compared with the past six or seven years. But the cost of natural gas at the wellhead is only part of the cost the utilities incur, said Alicia Dixon, a spokesman for CenterPoint Energy.
“If you want [natural gas] at your stove, it costs a little more because we have to get it to you, we have to transport it on the pipeline, we have odorize it,” Dixon said. “There are just things we have to do.”
Those fuel-related costs are passed to the customer,and the utilities are not allowed to profit from them, Dixon said.
The Public Service Commission also allows utilities to include their costs for energy efficiency programs and the recovery of costs to move utility lines, said Rich Davis, a spokesman for SourceGas.
Summer natural-gas bills are typically low, said Michael Callan, president of Arkansas Oklahoma Gas.
Arkansas Oklahoma Gas customers last summer paid an average bill of $23.36 a month, including all charges and taxes, Callan said. This summer, the charge would be $24.68 for an average customer’s monthly bill, if gas usage is the same, he said.
Arkansas Oklahoma Gas and SourceGas normally have a lower cost per 100 cubic feet of natural gas than Center-Point does, Callan said, based on filings with the Arkansas Public Service Commission.
In the past seven years, the highest cost per 100 cubic feet was $1.16 for CenterPoint and $1 for Arkansas Oklahoma Gas and SourceGas in the summer of 2008.
The summer of 2012 had the lowest cost per 100 cubic feet at 30 cents for SourceGas, 36 cents for Arkansas Oklahoma Gas and 47 cents for CenterPoint, Callan said.
Natural-gas futures for May delivery rose 3.7 cents Monday to settle at $4.476 per million British thermal units on the New York Mercantile Exchange. Gas futures settled below $3.60 per million Btu in November.
“The cold temperatures seem to suggest that it’s going to be a lot harder to refill storage before winter heating demand kicks in,” Phil Flynn, a senior market analyst at Price Futures Group in Chicago, told Bloomberg News. “We’re going to have a slow start to the storage injection season.”
Analysts have said the push to replenish natural-gas stockpiles could be good for the Fayetteville Shale play in Arkansas where drilling slowed as gas prices dropped.
Arkansas, Pages 9 on 04/08/2014