Natural gas to cost more

The average customer's bill will be $10 higher in May than a year earlier.
By DON SHILLING
VINDICATOR BUSINESS EDITOR
Dominion East Ohio's natural-gas rates are increasing by 12.5 percent after three straight monthly declines.
The Cleveland-based utility said Tuesday that its gas cost recovery rate, per thousand cubic feet, will increase from $9.72 to $10.93, starting May 8.
Neil Durbin, a Dominion spokesman, said rates have risen because traders on natural-gas markets are concerned about the upcoming hurricane season and the high cost of oil. Many industrial users could switch from oil to natural gas if oil prices remain high, he said.
Retail prices had been falling this year as prices on wholesale markets declined because of a warm winter. Dominion dropped its rate between 6 percent and 12 percent in each of the past three months.
Lately, however, wholesale prices have been increasing, partly because of hot weather in Florida and the Southwest, said the federal Energy Information Administration. Increased use of air conditioning in those areas has led to a higher demand for electricity, which often is produced using natural gas.
Wholesale prices
The federal agency said in its report last week that wholesale prices reached $7.72 per thousand cubic feet, the highest level since early February.
The agency said wholesale prices are expected to be about $7.50 this summer, compared with $13.44 last December. The average wholesale price for this year should be about 10 percent less than the $9 average price in 2005, the agency said.
Wholesale prices are expected to rise to nearly $10 by next winter, however.
Dominion said its May rate for retail customers will be 14 percent higher than what it charged in May 2005 because much of last year's run-up in prices came later in the year. The average residential customer's bill for gas used in May would be $79, compared with $69 a year earlier.
The gas cost recovery charge, which accounts for a majority of a customer's bill, covers the utility's costs for buying gas. By state law, utilities can't make money from selling gas, just on the distribution. Dominion said 58 percent of its customers buy their gas from a marketing company.
shilling@vindy.com