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PG&E warns its bills could soar this winter

February 11, 2010 Trackback K2 Solar News Edit
David R. Baker, Chronicle Staff Writer

PG&E warns its bills could soar this winter

Friday, July 25, 2008

Oil prices jumped to historic highs this year. Gasoline, too. Now electricity prices could be headed up. Pacific Gas and Electric Co. warned Thursday that its electricity rates could rise 4.4 percent, on average, in October and another 11 percent in January - the result of high prices for the natural gas that fuels California's power plants. Other utilities across the country have issued similar warnings.

PG&E has different rates for different types of customers, and some would see a larger increase than others. The monthly electric bill for a typical home using 550 kilowatt hours of electricity would rise $3.22, hitting $75.34 in January. A larger home, burning 850 kilowatt hours, would see its bill jump $23.94 by January, to reach $172.39.

And that's just for electricity.

Most Californians heat their homes with natural gas, which costs 59 percent more than it did a year ago. As a result, PG&E expects residential heating bills to soar this winter, averaging $145.84 in January. Add the gas and electric portions of the bill, and homeowners could be paying PG&E $221.18 to $318.23 in January.

These increases may not happen.

Just like oil, natural gas rose in price throughout the spring and summer as investors poured money into energy commodities. But both oil and natural gas peaked July 3 and have been falling ever since.

If they keep falling, PG&E won't need such large increases, said Senior Vice President Tom Bottorff. The company has already asked the California Public Utilities Commission to approve the 4.4 percent rate hike in October. But PG&E won't formally request a January rate increase until later this year, probably in November.

"There's been tremendous volatility in gas prices," Bottorff said. "I'm hopeful they will drop before we file a request."

Other utilities throughout the country are in the same position, telling their customers to brace for high bills this winter. Southern California Edison, for example, recently warned that its electricity rates could jump 25 percent.

"You look at power prices in just about any region over the last year, and they've tracked natural gas prices very closely," said Travis Miller, an analyst who covers utilities for the Morningstar financial research firm.

Natural gas prices this summer rose almost as high as they did in 2005 when hurricanes Katrina and Rita knocked out natural gas wells in the Gulf of Mexico. Natural gas sold on the New York Mercantile Exchange peaked at $13.77 per million British thermal units, more than twice its price a year earlier. Since then, however, the price has plunged 32 percent, to $9.30. That's still higher than a year ago, when natural gas sold for $5.86.

Fears of a worsening economy are weighing on the price, because gas use tends to fall during recessions. "In a slowing economy, you get conservation," Miller said.

Still, the possibility of soaring utility bills worries consumer activists. Many Americans already struggle to pay for gasoline and groceries, said Mindy Spatt, spokeswoman for The Utility Reform Network.

"We're headed for an affordability crisis," she said. "The economy is in recession, consumers are paying more for food and in that context it would seem that all these essential services are going up."

Spatt said PG&E should look for expenses it can cut rather than resorting to rate increases. She recommended the company cut executive pay raises and ditch its $1.7 billion program to install high-tech electricity and gas meters throughout its territory.

"We understand that they have no control over (natural) gas prices," she said, "but there are other things they do have control over."

E-mail David R. Baker at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .

This article appeared on page C - 1 of the San Francisco Chronicle


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