Xcel predicts lower heating bills

Cheaper natural gas, normal winter forecast contribute to decline

Gargi Chakrabarty, Rocky Mountain News

Saturday, September 16, 2006

Colorado homeowners and small businesses bracing for high heating bills this winter got the promise of some relief Friday.

Xcel Energy projected a 13 percent to 14 percent decrease in natural gas bills for December, compared with the same month a year earlier. Declining natural gas prices, coupled with a likely return to normal winter weather patterns, are responsible for the rosy forecast.

Xcel also requested a 48 percent to 50 percent reduction in the price of natural gas it will charge customers in October compared with the same month a year earlier.

Xcel - Colorado's largest utility with 1.2 million natural gas customers - expects stable prices this winter unlike the wildly gyrating prices seen in the past three winters.

"After three years of seeing 25 to 35 percent increases each heating season, it is certainly good news to be able to report that prices will come down this winter," Xcel spokesman Mark Stutz said.

If approved by the Colorado Public Utilities Commission, a typical residential customer would pay $39.39 next month beginning Oct. 1, 41 percent less than the $66.77 paid in October 2005. A small business would pay $155.90, about 43 percent less than the $275.78 in October 2005.

Typical residential customers would pay $135.18 in December 2006, 14 percent lower than the $157.12 paid in December 2005. And small-business customers would pay $622.14, 13 percent lower than the $713.11 in December 2005.

The utility forecasts heating costs for December, a peak winter month, at the beginning of fall each year because of strong consumer interest. But actual costs that month could be different, depending on market conditions, pricing and weather patterns.

Xcel buys natural gas from the wholesale market and uses it both to generate electricity and to sell directly to customers to heat homes. It does not profit on the commodity and passes the cost of natural gas, dollar-for-dollar, to customers.

But the utility, which charges customers a service fee, is allowed to earn a 10.75 percent rate of return on equity on its services, which pays for costs such as maintenance of lines and administration.

This winter still might prove difficult for low-income families. That's because the federal Low-Income Heating Assistance Program, or LEAP, could lose one-third of its funds.

Skip Arnold, executive director of Energy Outreach Colorado, the state's largest nonprofit, said low-income families stand to receive only $310 in assistance this winter compared with last year's $550 for the six months from November through April.

That would cover only 31 percent of their total bills, compared with 52 percent last winter.

"From my perspective, it's a mixed bag," Arnold said. "It is great that natural gas price is dropping slightly compared to the last three years when prices tripled.

"But the flip side is that bills are still unaffordable for low-income households, and assistance available will be far less this winter than last year."

What you'll likely pay

• Natural gas bill for the average Xcel residential customer:

December 2006   *$135.18

December 2005   $157.12

Change   $21.94 -14%

October 2006   $39.39

October 2005   $66.77

Change   $27.38-41%

Note: * Estimated figures

chakrabartyg@RockyMountainNews.com or 303-954-2976