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Conservation Urged to Cut Energy Bills

The price Californians pay for natural gas could jump 50% or more this winter, but a regulator says utilities will have enough to meet demand.

October 05, 2005|Marc Lifsher | Times Staff Writer

SACRAMENTO — As natural gas futures prices hit new heights Tuesday, a top California energy regulator preached conservation as the only salvation against record winter bills.

"Right now prices are much higher than ever seen before and will continue to be high through this winter and into next spring," Joseph Desmond, chairman of the California Energy Commission, said in a briefing.

Desmond stressed that California won't face natural gas shortages despite damage caused by hurricanes Katrina and Rita to Gulf Coast energy installations. Storage by utilities is running above the average for the last five years, he said.

But expensive natural gas will pose a challenge, Desmond said, urging residential, business, institutional and government gas users to immediately begin cutting consumption and boosting energy efficiency to create a cushion against rising prices. A 10% drop in usage could reduce energy spending by more than $2 billion, he said.

The rising national market for natural gas, which was tightening even before the hurricanes struck the energy-rich gulf region last month, is expected to push California residential bills substantially higher this winter.

Southern California Gas Co., which serves 5.5 million customers from Fresno to the Mexican border, projects a 59% jump in January charges to $124 for the typical residential customer using 75 therms of energy, compared with $78 in January 2005, according to the California Public Utilities Commission. Pacific Gas & Electric's 3.9 million gas customers in Central and Northern California should see January bills go up by 43% to $154 from $108 last year for 89 therms of residential usage, the commission said.

Natural gas prices have jumped more than 40% since Katrina slammed the Gulf Coast in August, and on Tuesday natural gas for November delivery rose 20.7 cents, or 1.5%, to a record $14.224 per million British thermal units on the New York Mercantile Exchange.

The U.S. Mineral Management Service reported that 73% of gulf gas production remained shut down, and the U.S. Department of Energy said that 22 gas processing plants were closed and unable to provide pipeline-quality gas.

The market is "balanced on a thin edge," said Robert Ineson, a natural gas analyst in Houston with Cambridge Energy Research Associates. "Conservation is certainly in order for this winter."

The rise in gas prices also is expected to translate into higher electricity rates around the state because nearly half of California's power is generated using natural gas. For Southern California Edison's 4.6 million customers, rates could increase 10% to 15% in the first quarter of next year, according to proceedings pending at the Public Utilities Commission.

The hike in gas prices could pose an economic hardship for low-income residential users, warned Bob Finkelstein, executive director of the Utility Reform Network, a ratepayer advocacy group known as TURN.

The network and other consumer organizations will ask the utility commission at a meeting Thursday in Los Angeles to limit bill increases for poor families to no more than 20%.

To meet longer-term needs, the state needs to boost its efforts to burn fossil fuels more efficiently, develop renewable energy sources and import more relatively clean natural gas from Canada and overseas, Desmond said.

California produces 13% of its natural gas needs and brings in the rest primarily from the Southwest and Rocky Mountain regions and Canada.

Proposals to build California facilities to receive liquefied natural gas tankers -- which carry gas cooled to minus 260 degrees so it can be shipped in liquid form -- have met opposition from those who argue that new supplies aren't needed and that liquefied natural gas poses a safety risk to coastal residents.

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