Consumers reeling from higher prices at the gasoline pump will need to brace themselves for higher home heating costs as energy prices reach unprecedented highs. Energy prices were already steadily rising before Hurricane Katrina?s impact on oil and natural gas production and transportation in the Gulf of Mexico. The Department of Energy (DOE) Short Term Energy Outlook released this week warns all consumers, regardless of their fuel source, to expect sharply higher bills this winter.

According to DOE estimates, home heating fuel costs will range from 20 to 70 percent more than last winter. A family of four heating a 1,500 sq. ft. home this winter with natural gas can expect to pay around $670 as compared to $490 last winter.
These increases reflect only the rise of wholesale fuel prices, which are passed on to consumers, not the total cost. Consumers are being urged to take measures now to ease the impact of higher energy costs come colder temperatures ? through home weatherization programs, signing up for budget billing plans as available, learning and applying conservation tips, seeking financial assistance through low-income assistance programs as applicable, and saving extra dollars now to meet the rising costs of the coming months or paying their accounts ahead during remaining warm months.

Anatomy of a Natural Gas Rate
The natural gas rate local customers pay is made up of three components:
1) the cost of the natural gas commodity itself,
2) the cost to transport the gas from where it is produced (primarily from the Gulf of Mexico, Texas and Louisiana) to the city utility, and
3) the cost to transport the gas from the citygate to the customer?s home.

The cost to transport the gas to the home is a regulated (by local government), fixed cost based on consumption.
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PREPARE FOR HEATING COSTS
9/9/2005
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The cost to transport the gas interstate to the city is also a regulated (by the Federal Energy Regulatory Commission) fixed cost; however, the third component, the natural gas commodity price, fluctuates with the market as it reacts to weather and supply and demand issues. It is this component, which has in recent years experienced sharp swings resulting in the anticipated higher winter heating bills. As a ?pass through? line item cost, customers must pay the local utility the price it has already paid for the natural gas.

It?s Simply Supply and Demand
In recent years, natural gas prices had trended upward due primarily to increased demand for natural gas for various applications, including electric power generation. Traditionally, natural gas prices dropped in the summer months due to lower demand, however, our economy?s growing need for electricity has put an increased demand on natural gas supplies taking prices higher even in summer months.. Now compounding this situation is slowed natural gas production due to Hurricane Katrina?s devastation in the Gulf region, further reducing supply, as we head into the cooler autumn months and steadily increasing demand for home heating and other applications.

Common Concerns and a Common Cause
Utilities are doing what they can to minimize costs at the wholesale level. Utilities want what consumers want: adequate supplies of natural gas at affordable prices delivered reliably. Municipally-owned and operated systems in the Southeast, like Lawrenceburg Utility Systems who are Members of the Municipal Gas Authority of Georgia, are actively taking steps to reduce the impact of wholesale natural gas prices on consumers.

The Gas Authority aggregates the natural gas supply needs of all of its 73 Member systems to negotiate better volume pricing through greater economies of scale. In addition, the Gas Authority uses financial tools, such as hedging, to limit price swings and buys some natural gas supplies during warmer, and traditionally, less expensive months of the year. The Gas Authority purchases these supplies from major producers in the United States and manages the transportation of natural gas to the citygate via two major interstate pipelines. The Gas Authority is a non-profit organization established by cities to efficiently purchase their natural gas supplies. In addition, the Gas Authority works through the American Public Gas Association to affect policy change in our nation?s capital, seeking to increase supply and lower costs.
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However, despite these efforts weather is the number one factor impacting prices and how much energy is required to heat the home. While consumers cannot control the weather, they can help manage their energy costs by using natural gas and other forms of energy wisely. Consumers are strongly urged to take measures now to mitigate their personal higher home heating costs, including: utilizing home weatherization and conservation tips, budget billing plans as available, seeking financial assistance through low-income assistance programs as applicable, and saving extra dollars now to meet the rising costs of the coming months.

Help Lower Utility Costs With These Ten Energy Saving Tips

1 - Install a programmable setback thermostat to conveniently and effectively control heating costs without sacrificing comfort. Lower the temperature setting at night and when you are not home. Turning your thermostat back 10 ? 15 per cent for just 8 hours a day can save as much as 10% annually on home heating and cooling bills.

2 - Check your furnace filter frequently and replace or clean it as needed. A dirty furnace filter can drive up the cost of heating your home.

3 - Add a humidifier ? either on your furnace or as a separate unit. It can help control heating costs, because moist air feels warmer.

4 - Adjust register openings to keep various rooms of your home at the desired temperature. Remember heat rises, so you may want to partially close upstairs registers.

5 - Use draperies, blinds, curtains or shutter on all windows to slow the loss of heat through the glass. Keep window coverings open on sunny days to let in the sun?s warmth. Close them to insulate against colder air at night.

6 - Rearrange furniture for winter, placing it next to inside, instead of outside walls and away from windows. Avoid blocking heating registers and air returns with furniture, draperies or carpet.

7 - Use kitchen, bath and other ventilating fans sparingly in cold weather. In just one hour, these fans can blow away a houseful of warm air.

8 - If you have ceiling fans, make sure the mountings are snug and tight. Use clear caulking to seal any leaks you may find, as even minor cracks around the base can let in lots of cold air.

9 - Purchase some inexpensive, pre-cut insulation gaskets and seal out the cold air entering your home through electrical switches and outlet plates, particularly those on outside walls. Closets and cabinets on outside walls can leak a great deal of cold air, so make sure the doors fit snugly and keep them tightly closed.

10 - If it?s time to replace your natural gas furnace or water heating system, consider a high efficiency system. The money saved on your monthly energy bill can offset the higher costs of a high efficiency natural gas furnace. According to the American Gas Association, the average home uses 22 percent less natural gas than it did in 1980 ? in part because of more efficient appliances and tighter home construction.