MAHONING VALLEY Consumers to face dramatic increase in natural gas costs

People shopping for a good deal on natural gas will be disappointed.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Many area residents are about to receive some shocking news about their natural-gas bill.
It's headed up -- way up.
While some residents have been paying higher prices for some time, more than 100,000 eastern Ohio homeowners have been shielded by a three-year contract that they signed with FirstEnergy Solutions back when prices were low in 2000.
Those contracts expire in October and November. FirstEnergy says customers will be notified 45 days before their contracts end.
The contracts charge either $4.87 or $4.91 per thousand cubic feet of gas. The best price for a fixed-term contract now is $6.99, which is available from WPS/FSG Energy Services for a 23-month contract.
That is one of 10 gas marketers making offers to customers in the Dominion East Ohio service territory, according to the "Apples to Apples" comparison chart available from the Public Utilities Commission of Ohio.
FirstEnergy customers who don't opt for a gas marketer will automatically receive gas from Dominion at a charge of $8.58 per thousand cubic feet. That charge is up from $5.01 a year ago.
Made the change
Dominion's charge was too high for Patricia Asher of Boardman. After closely watching prices on the PUCO Web site for six weeks, she recently chose a WPS/FSG offer for one year of service at $7.10. Customers of marketers also pay sales tax, while Dominion customers pay a gross-receipts tax of 42 cents per thousand cubic feet.
She opted out of her FirstEnergy deal before it expired because she wanted to lock in prices before they went higher. She admits, however, that she's just guessing that prices are headed up.
"As homeowners, we're really at a disadvantage because we don't know the natural-gas market," she said.
She knows more than most homeowners, however. As bookkeeper for Becker Funeral Home in Struthers, she has been looking into prices for the business.
The funeral home had been paying $3.95 per thousand cubic feet under a contract with FirstEnergy Solutions. Now, it's paying $6.44.
Owner Dan Becker said the increased cost will be a strain on the business, which operates two human crematoriums that serve area funeral homes and one pet crematorium that is used by the public. He said the business will try to absorb the additional cost as best it can.
"We might have to pass on some of it to our customers," he said.
Can't pass costs along
Cy Lutz, co-owner of Inglis Greenhouse & amp; Gift Shop in Boardman, said passing the rising natural-gas costs along to his customers is out of the question. The plant and flower market is just too competitive, especially with Home Depot just down the street.
"It's been tough on us," he said.
The business has had to delay expansion plans because of increased operating costs in recent years, primarily from natural-gas and health-care costs, Lutz said.
Inglis normally has a $200,000 gas bill during the winter. Last winter, the bill was $325,000 and three years ago it was $400,000.
To bring the bill down to about $225,000, Inglis will close half of its four-acre greenhouse this winter. Production will not be cut back so the greenhouse will store plants differently and change how it grows plants to deal with the space reduction, Lutz said.
The increasing cost is simply a factor of supply and demand, said Neil Durbin, a spokesman for Dominion.
Demand for natural gas is increasing because more power plants are being fueled by natural gas, he said. Also, demand was high last winter because of a long stretch of cold weather, he said. Meanwhile, production is decreasing because production areas are being depleted.
Analysts had predicted that prices would be even higher this fall, but increases were smaller than expected because of the cool summer didn't strain power plants, he said.
Dominion will file its next gas charge with the PUCO by the end of this month to cover November through January. Durbin said he couldn't indicate what the charge will be but added the utility hopes a recent moderation of prices will continue.
Recommendation
Durbin recommends that all Dominion customers consider choosing a gas marketer. About half of its 1.2 million customers have done so. The utility's profits come from the transportation of gas and servicing accounts. It passes the cost of gas along to its customers without markup.
Those who go hunting for bargains like they received in 2000 will be disappointed, said Patricia Rose, president of the Better Business Bureau of Mahoning Valley.
"There are no deals out there," she said.
She recommends that customers evaluate marketers by finding out how long they have been in business and if there are any complaints on file with the BBB in city where the are located.
She said she would choose a fixed-rate plan, even though variable-rate plans carry lower prices. If the winter is cold or supplies are interrupted by a natural catastrophe or terrorist attack, prices could jump dramatically for those with variable-rate plans, she said.
Durbin said he also recommends that people lock in a price for one year to get through the coming winter.
Rose tried to arrange a new deal with FirstEnergy Solutions for BBB members, but the company stopped making natural-gas offers in April 2001.
BBB's involvement
The BBB got involved with natural gas because many people missed the deadline for FirstEnergy Solutions' first offer in 2000. So many people wanted that offer that the company's phone lines were jammed for days. The BBB and the company then offered a second chance for area residents.
Ellen Raines, a FirstEnergy spokeswoman, said the company will make another offer only when it can provide long-term savings for customers. High prices and market instability prevent that now, she said.
The company, which is a subsidiary of FirstEnergy Corp. of Akron, offered its three-year contracts at prices below other marketers because prices had been stable, she said. As soon as customers were signed up, however, the market changed and prices began rising.
She declined to say if the company made or lost money on the offers.
shilling@vindy.com