Winter heating rates stable for now
September 6, 2005
Soaring gasoline prices from Hurricane Katrina likely won’t affect home heating prices this winter, but may increase energy costs in the long-term, public utilities officials said this week.
Rates are still expected to go up this winter, however, because of rate increase requests already in the works.
It takes six to 18 months to get approval for rate increases in Nevada, officials said. In California, rates are adjusted month-to-month based on the cost of electricity or natural gas.
“Electricity is not directly tied to gasoline costs,” said Faye Andersen, spokeswoman for Sierra Pacific Power Co. “But because all of the petroleum products usually are tied together, when one rises, the other rises.”
When the price of the raw materials to generate electricity goes up, such as natural gas, heating oil or coal, that drives up the price of electricity, she said.
Hurricane Katrina will “absolutely” affect prices in the long run, she said.
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Huge demand for firewood
Meanwhile, last year’s long winter impacted wood supplies for this year, according to Chris Headrick of Fireside, the largest wood distributor in Nevada. People started reordering last March, so supplies for this year are diminished. Because wood has to season for at least two years, supplies are not easily replenished.
His phone is ringing off the hook, with over 100 calls a day for cord deliveries.
“There is a shortage, brokers are buying it up,” Headrick said.
Electricity and natural gas prices are regulated differently in California and Nevada, but both state’s systems aim to prevent large fluctuations from affecting the consumer.
Southwest Gas, which provides natural gas to most who live in the Tahoe Basin, buys 50 percent of their supply through contracts ahead of time. The other 50 percent is based on the current price of natural gas.
“That helps to stabilize prices for the customer,” said Cynthia Messina, spokeswoman for the company. “When you pay for gas in the pumps, you are paying for what it costs that day. When you pay for natural gas, you are paying for what it cost last year.”
Utility increases expected
Both Southwest Gas and Sierra Pacific are waiting for approval on rate increase requests placed in the last six months.
Sierra Pacific is requesting a 16 percent general rate increase for residential customers in California, and does not expect to hear on that until after the New Year, according to Andersen.
The company has also asked the Nevada Public Utility Commission to approve a 3 percent increase for residential customers to cover increasing fuel prices. The new rate may be in effect by November 1, Andersen said.
Southwest Gas has requested a 10 percent rate increase for Northern Nevada residents to cover increased energy costs, according to filings on the Nevada PUC Web site.
General rate increases cover the operating expenses such as costs of equipment and personnel. Purchase power rate increases cover the increasing cost of fuel. Energy companies may not make a profit on purchase power rate increases.
Rate changes in natural gas over last 8 years
Southwest Gas Corp.
Average December gas usage: 97 therms
2000: $130.43 (electricity was deregulated this year)
Average December gas usage: 112 therms
Source: Southwest Gas Corp.
Rate changes in electricity over last 8 years
Sierra Pacific Power Co.
Average usage: 650 kWh
proposed increase: $89.31
Average usage: 715 kWh
Feb. 1997 $62.50
Feb. 2001 $66.14
July 2001: $73.43
June 2002: $74.99
June 2003: $74.31
June 2004 $80.05
June 2005 $86.44
Source: Sierra Pacific Gas Co.