Natural gas costs to soar this winter
Clif Knight, Hartselle Enquirer
Hartselle families who use natural gas to heat their homes can expect their utility bills to increase by 20 to 25 percent in the winter months, according to Hartselle Utilities General Manger George Adair.
"We have purchased enough gas to last half the winter for $6 per M.C.F. (or 1,000 cubic feet," Adair said. "Most of what we used last winter was purchased for $5.50 per M.C.F. We have held off buying more because the current market rate is $8 per M.C.F. We hope the rate will drop but we assume, under the best of circumstances, that we'll have to pay more than $6 for what we'll need to meet customer demand."
HU uses a Cost of Gas Adjustment (COGA) to establish the gas rate for its 3,324 residential gas customers. It includes the cost of the commodity, cost of transportation and a markup to cover the cost of operations and maintenance.
Adair said the markup has been increased 7 percent since last winter but makes up only a small part of the overall increase.
Adair said having access to storage space and buying on the futures market helps keep the price of gas well below what it would be if the entire supply was were purchased on the open market.
Last year, about 85 percent of the gas the city used was either purchased and stored or bought in advance for future delivery.
"We don't speculate," Adair said. "We buy according to our projected need."
Adair pointed out that the city was buying gas for $2 to $3 per M.C.F. five years ago.