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October 13, 2004
Naperville, Ill. -- Nicor Gas is urging customers to start planning now to manage for the potential of high home-heating bills this winter, following national trends of the last few years.
The U.S. Energy Information Administration (EIA), which provides updated monthly forecasts, is currently predicting that natural gas household costs across the country could be about 15 percent higher than last winter.
Nicor Gas has taken action to help lessen the impact of market prices by filling its underground storage to capacity and using financial purchasing instruments, which combined make up about three-quarters of the gas needed for this winter. Like all Illinois utilities, Nicor Gas does not profit from gas costs per regulations set by the Illinois Commerce Commission.
For the past two winters, the average residential customer using natural gas for heating, hot water and cooking spent $739 and $728, respectively, for the October – March winter heating season, (for an average house size: 2,000 to 2,500 sq. ft.) But because every home is different and usage patterns can vary widely, the company recommends that customers look at their own historical gas use by visiting www.nicorgas.com/myaccount.
Customers Advised to Plan Ahead
At the My Account section of the Nicor Gas Web site, customers can also look at alternative payment programs and usually sign up online. Nicor Gas recommends that customers consider joining the Budget Plan, which spreads payments over a 12-month period and may be adjusted up or down every four months to correct for future gas prices and customer usage. Also, customers are encouraged to inquire about Customer Select® and other programs, which enable customers to choose an alternate natural gas supplier. Participating suppliers may offer pricing programs that fit differing customer needs. Nicor Gas still delivers the gas and provides emergency and other customer services, and for most customers, the supplier charges appear on the customer's Nicor Gas bill.
"We're asking customers to plan and to manage for continued high costs and the possibility of volatility in cost swings this winter. So, this is an especially good time to evaluate various payment plans that are available," said Chris Suppes, vice president sales and customer care. She noted that more than 800,000 of Nicor Gas' two million customers are either on the Budget Plan, Auto Payment (electronic payment) or alternate supplier programs such as Customer Select.
The National Picture on Gas Supply/Demand
Like oil and gasoline prices, the movement of natural gas prices on the open market continues to rise. This summer, Nicor Gas and other natural gas utilities paid record high summer prices for the gas they put into storage.
Nicor Gas puts about half of its winter natural gas requirements in underground storage during the warmer months to meet its first obligation to customers; namely, securing a reliable supply of natural gas for even the coldest winter days. The remaining half is purchased either at prices protected by financial instruments or bought on the open market. "What we are striving for in this era of market volatility," explained Rocco D'Alessandro, senior vice president operations, "is to protect customers from wide swings and the possibility of even higher costs, especially in the winter when usage is greatest."
National Supply and Demand Overview
Here is a quick review of four major factors that impact natural gas prices: weather, the economy, storage and production.
First is weather. Weather can have the strongest impact on gas prices and is also the most difficult to predict. Not only do weather conditions in the Midwest impact natural gas prices, but so does weather throughout the country, particularly the eastern U.S. where there is potential for large natural gas consumption. Looking forward, a critical time period is November and early December, according to D'Alessandro. "Early-season cold weather across the country can drive down storage at the beginning of the heating season. That's what happened in 2000, which contributed to the highest winter prices ever," he explained.
A more robust economy demands more natural gas to fuel growth and increased production. Increased use of natural gas for electricity generation, as well as overall industrial demand for natural gas from economic growth, can both cause a rise in prices.
Record summer injections have eased concerns over adequate storage inventory heading into winter. However, colder than normal U.S. weather could cause storage levels to be drawn down at an accelerated pace this winter, impacting prices. Nicor Gas has already met virtually 100 percent of its storage needs for this winter.
Finally, natural gas production has not kept pace with rising demand. While more wells are in production, both the higher costs of reaching the gas and completion of wells have contributed to keeping prices higher.
Nicor Gas will update customers throughout the winter about the natural gas situation in its bill mailings to customers and at www.nicorgas.com. "We're doing everything we can to moderate the costs customers pay for natural gas," D'Alessandro said, adding, "We recommend customers continue to learn about the situation. There is financial assistance available to lower-income customers and payment programs available to help people if they've fallen behind. If people are having difficulty, they should know we're here to help, and they should call us right away." Customers can call Nicor Gas' toll-free number at 1 888 Nicor4u (642-6748) to speak directly to a customer service representative.
Nicor Gas is one of the nation's largest natural gas distribution companies. Owned by Nicor, Inc. (NYSE: GAS) a holding company, Nicor Gas has provided safe and reliable natural gas services for 50 years. The Company serves two million customers in a service territory that encompasses most of the northern third of Illinois, excluding the city of Chicago. For more information, visit the Nicor Gas Web site at www.nicorgas.com.
ADDENDUM -- Energy Tips Fact Sheet
Nicor Gas suggests customers practice efficient energy use to help manage for higher energy costs. Here are five tips most customers can use before winter to ensure efficient natural gas usage.
- Make sure your furnace is ready for winter. Have a qualified contractor perform an inspection. If repairs are needed, have a qualified contractor perform the work.
- Weatherize the areas in your home where warm air can easily escape including seams, cracks and openings around windows, doors and baseboards, as well as through small openings around television cables, dryer vents and plumbing pipes. To seal these areas use caulk, sealant or weather-stripping. Reducing air leaks could cut as much as 10 percent from your monthly energy bill.
- Set your water heater temperature to 120 degrees Fahrenheit or less and cut your water heating expense without sacrificing comfort. Water heating is a typical family's third largest energy expense, accounting for approximately 14 percent of utility bills.
- Install a programmable thermostat that can be pre-set to lower the temperature when you're sleeping or at work. Something as simple as setting back your thermostat 10 to 15 percent for eight hours per day can help you cut your annual heating costs by as much as 10 percent.
- Seal your ducts, this not only boosts the overall efficiency of your system, but also significantly lowers energy bills. Leaking ducts can decrease the overall efficiency of your heating and cooling system by as much as 25 to 40 percent.
For more useful energy tips, visit nicorgas.com and download a copy of a brochure, "Keeping the Warmth In and the Cold Out." Or, call 1 888 Nicor4u to request your copy. |
