The PD's John Funk makes a heroic effort today to explain what's happening to natural gas bills, but it's very confusing -- even to your humble utility blogger, who has buried his nose in the subject for the last couple of weeks.
Here are the main things I think we all need to understand:
1) Overall, heating our homes with gas is nearly twice as expensive as it was just four years ago -- and it's going to stay that way.
Dominion's home gas bills spiked from around $5 per thousand cubic feet (mcf) to almost $11 in the first half of 2001, but fell back under $6 by spring 2002. This winter's spike, which took us to $16 per mcf in December, is also falling back due to the cheap short-term contracts Funk describes -- but the final price on our bills is unlikely to go much below $13 this summer, and then start pushing back upward for next heating season. In other words, $13-$15 per mcf is Dominion East Ohio's new "normal range".
To see the monthly ups and downs evened out, look at the chart below. The main graph line is the running average of home natural gas costs -- calculated each month for the previous twelve months -- while the little boxes represent the annual "floor", i.e. the lowest monthly cost per mcf during each calendar year. The blue box is the likely floor (IMHO) for 2006 -- around $13, some time this summer. (All monthly figures are from the PUCO's "Apples to Apples" comparison charts.)
2. NOPEC isn't going to save us. The new "aggregation" deal announced last week by the Northeast Ohio Public Energy Council means that households in NOPEC cities, including Cleveland, will pay about $12.74 per mcf from April through September ($9.70 contract gas cost, plus 73 cents in sales tax on the gas, plus $2.30 for East Ohio's transportation charge). This will probably be no more than 2% or 3% cheaper than Dominion East Ohio's own rates, which will fall to a similar level for the same period. Then NOPEC has to negotiate a new -- and higher -- contract gas rate for bills starting in October.3. There's really no way out of this -- for individual consumers or for the NEO economy -- but to invest in heating our homes a lot more efficiently, or invest in heating with something other than natural gas, or both.