N.C. residents should brace for increased utility bills

Already reeling from gasoline prices that are pushing $4 a gallon, N.C. residents could soon pay more to cool and heat their homes.

All major utilities in the state are seeking rate increases to cover higher fuel costs:

PSNC Energy, the Triangle's natural gas utility, wants to recover the rising cost of the fuel it pipes to 458,000 homes in the state. The proposed rate jump will translate to a bump of about $3.25 a month this summer when the gas is used for cooking, but a more painful jump of $19 a month to heat homes in winter.

Those cost increases, based on average seasonal household usage, assume that rates will hold constant for the rest of the year, which is not a given.

Natural gas utilities are allowed by state law to adjust their rates once a month to cover fuel costs. Electric utilities can adjust rates just once a year to pay for their fuel costs.

PSNC and Piedmont supply natural gas to more than 1million N.C. households. Piedmont is Charlotte's primary natural gas provider. The rate increases are expected to be approved by the N.C. Utilities Commission on Tuesday and become effective June1.

“It'll hurt,” said Carlton Smith, kitchen manager at Joe's Place, a restaurant in downtown Raleigh. “I'll feel it all the way around – in the pocket and in the tank.”

But the 50 percent who heat their homes with electricity will also pay more. Progress Energy next month expects to file a request for a rate increase to cover the rising costs of coal and other fuels – including natural gas – used to run power plants and generate electricity.

Progress is expected to ask state regulators for an increase of at least 6 percent.

In the past decade, Progress has increased rates by 20 percent to cover fuel costs. Most of those increases have come in the past three years.

The cost of natural gas has increased about 46 percent in the past year as demand for the product has increased. Because the gas is used as a substitute for crude oil, heavy industry switches to natural gas when oil prices rise, driving up natural gas demand and costs.

Natural gas traditionally was in demand primarily for winter heating and for years was abundant during the summer. But after a national build-out of natural gas power plants in the 1990s, the gas accounts for about 20 percent of the nation's electricity and is in demand year-round. Populous states such as Florida and California depend on natural gas for half their electricity.

Still, some experts are taken aback at the run-up in gas costs.

“Everyone is surprised that the price is as much as it is for the summer period,” said Jeff Davis, director of the gas division for the Public Staff, North Carolina's consumer advocacy agency in utility rate cases. “It's amazing that it's still up.”