Rate cuts likely for natural gas customers

The state's two biggest natural gas utilities are proposing significant rate cuts for their nearly 1.2 million customers combined.

Piedmont Natural Gas, whose territory includes Mecklenburg and Union counties, is proposing a cut of about 16 percent. PSNC Energy, whose territory includes Concord, Statesville and Gastonia, is proposing to reduce residential rates about 14 percent effective Oct. 1.

At a time when electricity users will have the biggest cost increases in decades, the rate cuts from PSNC and Piedmont would bring much-needed relief to residents who heat their homes with natural gas. For a typical household, the savings would amount to about $24 a month in the winter.

It's a reversal of energy patterns in previous years, when natural gas costs spiked after a hurricane, while electricity held steady. But this year, rising costs for coal and other fuels are forcing electric utilities to seek rate hikes.

Meanwhile, wholesale prices for natural gas and heating oil are down about 50 percent since this summer, while the wholesale cost of propane is down about 25 percent. Those drops would be passed on to customers who use those fuels, but not until suppliers sell inventory bought at peak prices.

Future prices are impossible to predict with certainty, but Aubrey Hilliard, a natural gas vendor in Charlotte, said that natural gas appears to be stabilizing after a staggering run-up in energy costs this summer that affected gas, oil and coal. In July the price of crude oil surpassed $145 a barrel, but it has since dropped below the symbolic $100-a-barrel mark.

“I think it's trying to find its trading range,” said Hilliard, president of Texican Horizon Energy. “It's not going to be at those excessive numbers.”

The natural gas pricing proposals by Piedmont and PSNC must be approved by the N.C. Utilities Commission, but approval is virtually assured.

Even with the decrease, PSNC customers still will pay 15 percent more this fall than last year, and Piedmont customers will be paying about 13 percent more this fall than last year. But as energy costs had soared this summer, state regulators feared that natural gas costs would continue going up through the winter.

“We are very glad that it is going down,” said Jeffrey Davis, director of the natural gas division for the Public Staff, the state's consumer protection agency on utility rate cases.

Natural gas utilities can ask the utilities commission to adjust their rates once a month, so there could be further price cuts before winter arrives. Electric utilities are permitted to adjust their rates for fuel costs just once a year. Propane is unregulated and the state's 500 vendors set their own prices.

PSNC's request would save about $24 a month for typical household that uses 94 therms in the winter. A therm is a unit of heat used to measure natural gas.