Natural Gas Industry Plans May Hike Consumer Costs

Article excerpt

By Pete Yost

Associated Press

WASHINGTON _ Natural gas customers may end up paying $4.4 billion more starting next year as the industry undergoes a dramatic restructuring forced by government regulators seeking to increase competition.

Estimates on how much more per year homeowners might pay range from a low of $12 to a high of $100.

Under the plan being finalized by the Federal Energy Regulatory Commission, pipeline companies will no longer buy gas; they'll simply deliver it.

The change would allow utilities and large businesses to negotiate their own deals with producers who pull the gas out of the ground, a move designed to increase competition and lower prices for the nation's 55 million natural gas users.

But initially, the pipelines will have to pay penalties to producers for canceling their existing gas contracts, and FERC is allowing them to pass on those multibillion dollar costs to customers.

"In January or February of this coming year, there's going to be a very loud outcry from consumers over the prices they're paying, a reaction to restructuring," predicted Bob Cave, executive director of American Public Gas Association, which represents 950 municipal gas companies.

FERC, which regulates interstate gas pipelines, estimates the restructuring will cost customers $4.4 billion. But that covers everyone _ electric utilities as well as industrial, commercial and residential customers. State commissions will rule how it's to be apportioned among them.

The agency hopes to have the plan in place by Nov. 1.

Vern Margard, a lawyer with the Office of Consumers Counsel, a state agency in Ohio that represents residential utility customers, estimates the tab for average homeowners will be an extra $100 a year.

"Substantial price increases are an absolute certainty for the next several years," he said.

But the Interstate Natural Gas Association of America, an industry group, disputes that estimate, saying that the cost will average $12 a year per homeowner for three years.

Already there's concern on Capitol Hill, where Democratic Reps. …