Express carries gas prices away

Coloradans' heat bills could spike 8% in Feb.

By Gargi Chakrabarty, Rocky Mountain News (Contact)

Published January 15, 2008 at 12:05 a.m.
Updated January 15, 2008 at 1:15 p.m.

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Photo by Matt McClain © The Rocky/2007

Workers on the 1,700-mile Rockies Express Pipeline, a joint venture of energy companies, gather tools and equipment near Julesburg at the end of the work day in November.

Photo by Matt Mcclain / The Rocky/2007

Welder Eric Chambless burns off an epoxy coating along a section of pipe on the Rockies Express Pipeline south of Cheyenne.

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The $4.4 billion Rockies Express Pipeline began delivering natural gas from Colorado to Kansas on Saturday, opening a competitive market for the state's gas.

More competition means gas bills for the state's residents will go up - almost immediately. The energy companies can now get higher prices from utilities offering service to residents of Midwestern states, and that will drive up prices in Colorado.

Colorado residents using natural gas could see a nearly 8 percent jump in heating bills next month compared with February of last year. Without the pipeline, bills could have been 14 percent lower than in February 2007, according to an estimate by Energy Outreach Colorado.

That estimate is based on the fact that gas in the Rocky Mountains - which was $3 to $5 per million Btu cheaper than in the rest of the nation last summer - now is only a dollar cheaper. The price gap could narrow even further in coming months as more segments of the pipeline open.

"The effect on natural gas prices due to the Rockies Express Pipeline is putting tremendous pressure on the state's low-income families, seniors and disabled people," said Skip Arnold, executive director of EOC, a Denver- based nonprofit that helps needy families pay utility bills. "These are the people who are hardest hit by any increase in utility costs. Like the canary in the coal mine, they feel it first and they feel it hardest."

Xcel Energy spokesman Mark Stutz declined to confirm whether EOC's estimate was close to the utility's projections, which are scheduled to be announced Friday.

The utility has warned that the pipeline will have an impact on customer heating bills beginning in February.

"At this time of the year, it's a double whammy for customers, in that gas price will go up, gas consumption will go up, and so bills will see a significant increase," said Jim Greenwood, director of the Colorado Office of Consumer Counsel.

Greenwood reiterated that the state does not regulate the price of gas and that utilities such as Xcel Energy are allowed to pass the commodity price, dollar-for- dollar, to customers without any markup.

Gas for February delivery is hovering around $8 per million Btu on the New York Mercantile Exchange. A British thermal unit, or Btu, is a quantity of heat required to raise the temperature of 1 pound of water by 1 degree Fahrenheit.

"The theory is that ultimately bills could be more for customers in the coming months because producers will be able to sell more natural gas at higher prices in other parts of the country," said Xcel's Stutz, "which could put upward pressure on the depressed prices we have enjoyed in Colorado since this past summer."

On Saturday, the pipeline began carrying about 1.4 billion cubic feet of natural gas a day from Weld County to Brown County in northeast Kansas. It will be extended to Audrain County in east-central Missouri by early February.

The pipeline's first segment, which runs from Rio Blanco County to Sweetwater County in Wyoming and then to Weld County, went online in mid-December.

Kinder Morgan Partners LP, Sempra Energy and ConocoPhillips are in a joint venture to build the 1,700-mile pipeline. When in full operation, likely in June 2009, it will have a capacity of 1.8 billion cubic feet a day.

The pipeline will ease delivery of gas from the Rocky Mountains to the energy-starved Midwest. Energy companies have long complained they are forced to sell gas in the Rocky Mountains at a cheaper price than in rest of the nation because they can't take the fuel out of here.

So far this winter, Xcel customers have enjoyed lower heating bills because of softer gas prices. For example, combined bills from November through January for a typical residential customer have been 3 percent lower compared with the same period a year earlier.

But EOC's Arnold says that price advantage soon will narrow and eventually disappear. He estimates that combined bills from November through April (the last four months reflecting the impact of the Rockies Express Pipeline) will be 13 percent higher than last year.

LEAP participation dips 5 percent

Fewer needy families are getting federal help even as heating bills are scheduled to rise in the coming months.

Since the federal Low-income Heating and Energy Assistance Program, or LEAP, began Nov. 1, 39,002 applicants had received help through Jan. 3 - about 5 percent fewer than in the same period last winter. The program, which runs through April, is managed by the Colorado Department of Human Services.

The diminished participation in the program could be the result of House Bill 1023, which passed in a special session in summer 2006.

The legislation requires applicants to provide a copy of a photo identification, such as a driver's license, and signed affidavits saying they are legal residents.

While the legislation was intended to exclude illegal residents, it may have discouraged seniors and disabled applicants who don't have the required documents, said Skip Arnold, executive director of Energy Outreach Colorado.

"Many low-income seniors and disabled people don't have photo IDs such as a driver's license," Arnold said.

Colorado's LEAP director, R. Scott Barnette, said the mild weather in past months also could have created less interest in the program.

Requirements for assistance

* Photocopy of an identification card such as a driver's license.

* Signed affidavits affirming applicant is a U.S. citizen or legal alien, and a Colorado resident.

* Applicant's gross monthly household income is lower than 185 percent of the federal poverty level. For a family of four, that's about $3,184 a month.

* Applicant is responsible for paying heating costs to a utility or a landlord as per rent.

* Call 1-866-HEAT-HELP (1-866-432-8435) for assistance.

chakrabartyg@RockyMountainNews.com or 303-954-2976

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