This economic downturn might produce at least one benefit this winter: lower natural gas bills.
Executives with Black Hills Energy on Monday said they’re expecting natural gas prices to be about 25 percent less than they were a year ago.
“We have some very good news to tell about what is happening with natural gas prices,” said Ivan Vancas, vice president of operations for Black Hills in Kansas and Colorado. “We’re seeing some things that five years ago we really did not predict. Back then we were concerned about looming shortages.”
Instead, the worldwide economic downturn has caused large industrial users — and gas-fired power plants — to consume far less natural gas than projected. The slowdown in demand has the amount of natural gas being held in storage near a 10-year high, Vancas said.
“The trend we’re seeing now is very positive for consumers,” Vancas said. “These are some very low gas prices.”
The price of gas accounts for about 60 percent to 80 percent of a household’s monthly natural gas bill, said Curt Floerchinger, a spokesman for Black Hills. The rest comes from service and delivery charges.
Those service and delivery charges also are not expected to increase this winter. In 2008, when Black Hills Energy purchased the natural gas operations of Aquila, which previously served Lawrence, the Kansas Corporation Commission stipulated that Black Hills could not increase its rates for service and delivery until at least 2011.
“Our price for service will not go up in 2010, for sure,” Floerchinger said.
Instead, the biggest risk for larger gas bills may be the weather. If the winter is colder than last year, monthly bills may rise even with lower gas prices because homeowners will be using more gas to heat their homes.
But Black Hills executives are not projecting that to happen either.
“We believe we’re in an El Niño year,” Vancas said. “The winter is expected to be a little wetter than normal, but also a little warmer than normal.”
Floerchinger said that likely will mean most households will use about the same amount of gas as they did last year.
Black Hills executives made the price forecasts as part of a luncheon event for Lawrence city commissioners and several city staff members. At the event, Black Hills leaders also said:
• A slowdown in Lawrence’s growth is evident in the number of new service connections the company is making. Thus far in 2009, the company has made 99 new service connections. In the latter part of the 1990s, the company would make nearly 600 new connections in a year, said Chuck Hoag, an operations manager for the company.
• The company is concerned about a new cap-and-trade energy bill that is pending in the U.S. Senate. Vancas said Black Hills, which operates several coal-fired power plants outside of Kansas, believes the bill would be unfairly detrimental to Midwest utilities and their consumers because those utilities have been more reliant on coal to produce electricity. Supporters of the legislation have said the bill will help spur those utilities to switch to more environmentally friendly electric generation methods.