TXU warns summer bills could increase as much as 21 percent By Dan Piller Star-Telegram Staff Writer

Summer electric bills will be at least 21 percent higher than last year because of higher natural gas prices. That warning came Friday from TXU, the principal electricity provider for Tarrant County and North Texas.

TXU said the average residential electric bill last summer exceeded $200 for August usage. That figure is expected to rise at least $40 this summer.

Although TXU hasn't increased its base rates since 1994, it has received permission from state regulators for two fuel surcharges during the past year.

"We want to get the word out now before people begin to experience hardships because of higher bills," TXU spokeswoman Sandy Smith said Friday.

The company urged all its customers to use an average-billing option. Under that option, customers can have their monthly bills set on a 12-month average, rather than enduring the customary spike during the peak air-conditioning months - July, August and September. Texas electricity bills typically spike during the summer because customers need to run air conditioners at all hours. But the billing increases were more pronounced than normal last year when, TXU's figures show, the average monthly residential bill topped $200 for the first time. That was on the September bill, reflecting August usage.

That was a shock compared with the average $75 that TXU customers paid from January through May.

But things have worsened this year. During the winter, TXU's average monthly heating bill shot up above $100 from its customary $70-$75 range of previous years. Smith said this summer is likely to bring a similar year-to-year increase.

The culprit is the price of natural gas, which accounts for about 30 percent of TXU's electrical generating capacity. Coal and nuclear power account for the remainder.

Natural gas prices have increased in the past two years, largely because of a boom in construction of power plants. In Texas, 27 plants are under construction and all are to be powered by natural gas, which has been virtually dictated by environmental rules.

This trend has caused natural gas, long a sleepy backwater of the energy industry, to roar to life on commodity markets. From 1995 to 1999, natural gas prices averaged between $1.55 and $2.32 per thousand cubic feet. In 2000, the average natural gas price climbed to $3.60 per thousand cubic feet. Early this year, it shot above $8 per thousand cubic feet in response to bitterly cold weather in the Northern states.

Natural gas prices have slipped back below $4. On Friday, the July contract for natural gas traded at $3.87 on the New York Mercantile Exchange.

But Houston energy analyst Henry Groppe said the recent price break may be short-lived. Groppe, a 46-year veteran of the energy business, expects natural gas prices to exceed $5 per thousand cubic feet by the end of summer in response to heavy demand caused by air conditioners. He doesn't, however, expect prices to hit $8 again.

"Our prices are at a seasonal low right now because demand is pretty slack through May," Groppe said. "But as summer demand builds up, prices will rise."

Social service agencies predicted that the billing increases will hit older customers and lower-income people the worst.

"This will affect older adults tremendously," said Ellen Swift, project director of the AARP Foundation/Senior Employment Program in Fort Worth. "Many are on fixed incomes and have difficulties paying their bills already.

"Higher electric bills will make it even more difficult for them to live day to day," she said. "I imagine some just won't eat or they will do without their medication, because they will pay the rent and pay the utilities to keep a roof over their heads."

Debbie Haley, director's assistant of GRACE, an emergency organization that helps families in need, said she is concerned that the bill increases will tax the agency's already limited funds.

"We still have people trying to pay off their gas bills from the winter," said Haley, whose agency serves about 300 needy families each month. "This will only wreak more havoc in their lives."

TXU said its average-billing program is one of the best ways customers can even out their bills.

Bill averaging has been available to TXU's 2.8 million customers for years, but relatively few use it - about 186,000, Smith said. TXU is offering bill averaging to small businesses as well.

"It's a good way for people who live from paycheck to paycheck on fixed incomes to be able to plan their budgets better," Smith said. "People would pay less during the summer, and more during winter when utility bills customarily drop."

Some industry analysts believe that high summer bills could give Texas' nascent electricity deregulation campaign a kick.

A trial period for provider switching that began June 1 has attracted far fewer than the 5 percent of the state's households that could be eligible. All of Texas' residential customers will be eligible to switch providers Jan. 1, and, by law, everybody will get a 6 percent rate reduction in the bargain.

The various electricity providers - such as TXU, Reliant Energy, Enron's New Power, TNP Enterprises' FirstChoice, Shell Energy and the environment-friendly Green Mountain Energy - have been low-key in their marketing and silent about their marketing plans.

But some analysts expect marketing campaigns to increase this summer, as utility bills rise across the state. Many providers, for example, have already offered a free first month to residential customers who switch.

Staff writer Yvette Craig contributed to this report.

http://web.star-telegram.com/content/fortworth/2001/06/09/topstory/fw010108-0609-XA001-txu.htm

-- Martin Thompson (mthom1927@aol.com), June 09, 2001