The Fresno Bee Natural gas costs explode, burn customers for 50% more

By Mark Grossi The Fresno Bee

(Published December 13, 2000) California walked another energy tightrope Tuesday, facing another shortage alert as the wholesale price of electricity climbed 30 times higher than it was last year.

But those price increases aren't being passed on to customers yet, and the lights are still on. What may get the attention of Central California customers this month is the natural gas section of their bill.

Pacific Gas & Electric Co. customers this month can expect to see the first spikes on their bills for natural gas, which increased by 50% last month and will increase by another 15% this month. That means a $50 natural gas bill will become a $75 bill this month and $82.50 next month.

"The natural gas problem is nationwide, and it's part of an 8- to 10-year trend that happens with natural gas prices," said PG&E spokeswoman Christy Dennis. "Unfortunately, it happened now."

PG&E is offering up to $300 for people qualifying as low-income customers who are having trouble paying their bills. The money, which is distributed by the Salvation Army, is a combination of donations from customers and employees of PG&E as well as matching funds from the utility's parent company.

People who are having problems paying their power bills should contact the Salvation Army at (800) 933-9677 to see whether they qualify for the help.

PG&E faces bills of its own. Many power plants are fueled by high-priced natural gas, so the cost of producing electricity has skyrocketed.

To compound the problem, cold weather in the Pacific Northwest has forced Washington, Oregon and Idaho to use more electricity, which makes less available to export for California. Prices have climbed dramatically.

The average wholesale cost of a megawatt hour one year ago in California was $29.66, say officials at the California Power Exchange, the marketplace where electricity is bought and sold.

Tuesday, the average cost was $1,182.02.

"Our main problem is that we have an imbalance in supply and demand," said power exchange spokeswoman Beth Pendexter. "We're going out of the California market for power, and it is costing more. The price of natural gas is 20 to 30 times higher this year than it was last year."

But the cost of higher electricity is not yet passed on to three-quarters of the state, because deregulation law required utilities to freeze their rates until March 31, 2002, or until the utilities have paid off old debts.

PG&E and Southern California Edison Co. already have absorbed billions of dollars in extra costs, officials say. Utilities say they will need some relief soon, or they will face deep financial problems.

But possible energy shortages continue to take the spotlight right now. A Stage Two emergency was called Tuesday, meaning some big power users were told to cut back.

The electricity emergencies may be eased somewhat late this week as more power plants come back on line following necessary maintenance, said Kellan Fluckiger, chief operating officer of the California Independent System Operator, which makes sure the electricity keeps flowing.

"We had 11,000 megawatts off line last week, and that number has come down to 8,500 this week," he said. "By the end of the week, we should have another 1,000 to 1,500 megawatts back on line."

The reporter can be reached at mgrossi @fresnobee.com or 441-6316.

http://www.fresnobee.com/print/storynews/0,1737,221236.html,00.html

-- Martin Thompson (mthom1927@aol.com), December 13, 2000