Heating bill forecast Scattered price hikes.doc

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					Heating bill forecast: Scattered price hikes
Sep 17 - Providence Journal

Natural gas rates are likely to go up this winter, but it's too early to say what will happen with oil and

Heating bills last winter were painful. The extra-cold weather, combined with high fuel prices, did a double
whammy on our pocketbooks.

What about this winter?

Of course, no one knows for sure how heating bills will compare, but there are signs that fuel prices will be
higher than last year. Natural gas and home heating oil prices are higher than they were a year ago. And,
natural gas is likely to go up again this winter.

How high energy costs climb depends on the unknowable: the weather, crude-oil production, fuel supplies,
unrest in the Middle East, and many other factors.

We do know that natural gas rates are likely to be higher this winter. New England Gas has requested a 7-
percent rate increase for its 240,000 customers in Rhode Island, to go into effect Nov. 1.

If approved by the Public Utilities Commission, it would be the second rate increase this year. New
England Gas increased rates in April by a range of 5 percent to 12.8 percent. The gas company cited rising
fuel costs when requesting both rate increases. If the state has a normal winter, usage will be lower than last
year, and a customer's overall bill may be the same or slightly less than last season, said Chris Medici, a
spokesman for New England Gas. Gas usage was up about 10 to 12 percent from normal last winter, he

Natural gas continues to be expensive. It was trading at about $5 per million BTU this summer, when the
usual price during that period is generally $3.50 to $4, said James Grasso, an energy consultant with
SilentSherpa of Cranston. He predicts that gas will come down in the fall, then rebound higher this winter.

"The gas market has a lot of room to come down," Grasso said. "Assuming we have a fairly mild fall, we
should have a recovery."

The Energy Information Agency, part of the U.S. Department of Energy, predicted in its monthly short-
term energy outlook that natural gas prices will drop slightly through November, increase about 10 percent
until January, then fall back in the spring.

Gas prices are expected to be volatile until new supplies of natural gas are tapped, according to Richard
Reiten, chairman of the American Gas Association.

Home heating oil, which is used by about half the households in the state, has been relatively steady in
price since late spring. The average price in Rhode Island was $1.439 a gallon yesterday, unchanged from
last week, according to the State Energy Office. That's 13 cents a gallon higher than it was one year ago.

"Oil prices seem very stable," said Victor Allienello, spokesman for the Rhode Island Oil Heat Institute, a
trade organization of about 40 heating oil dealers. He is reluctant, though, to predict what will happen this
winter because of the variables.
"Ask me in April," he quipped. Factors include production levels and the price of crude oil, which is
closely tied to home heating oil; demand, which is tied to the weather; and political instability.

Allienello, who also runs East Providence Fuel Oil Co., is a proponent of price contracts for his customers.

There are several different types offered by local oil dealers, including a price "cap," which guarantees that
a price won't rise above a certain level. If oil prices fall, customers will get the lower price. Allienello said
his company is honoring last year's price cap of $1.299 a gallon, and will likely be setting this winter's price
cap in the next month.

Going into the winter, the state has plenty of home heating oil in storage, according to Janice McClanahan
of the state Energy Office. There is a 30- to 40-day supply, she said, which is about what it should be at this
time of year.

It's unclear what will happen to electricity prices in Rhode Island, though they are closely related to oil and
natural gas prices, since those are the two main fuels used to generate electricity.

Narragansett Electric won't say whether it has any plans for a rate increase this winter.

"We really can't predict that at this time," said Amy Atwood, a spokeswoman for National Grid, the electric
company's parent. In November, the utility will be doing its annual reconciliation filing, she said, and at
that time, the company will look at its fuel costs and see whether a rate adjustment is necessary, she said.

Gasoline, which peaked at a record high for Rhode Island last month, continues to decline slowly. The
average price of self-serve regular gasoline was $1.839 a gallon, down 2 cents from last week, according to
the state Energy Office. The state surveys area gas stations to determine the average price. AAA Southern
New England, which also does a weekly survey, found an average price of $1.829 a gallon, also down 2
cents. It found a 20-cent range in prices being charged by dealers and urged motorists to shop around.

The biggest factor in determining heating bills is the weather. The experts at the National Centers for
Environmental Prediction, which makes long-range forecasts, say they don't see any significant events so
far that would make the winter in New England differ much from normal.

"It's a very uncertain situation in the Northeast," said Ed O'Lenic, a senior meteorologist for the National
Oceanic and Atmospheric Administration.

"As of right now, we don't have any reason to tilt the odds for above or below normal for precipitation and
temperature for that region," he said in a telephone interview yesterday.

The latest edition of the Farmer's Almanac is more bold in its predictions. Winter will come early with a
cold blast east of the Rocky Mountains, and the Northeast will get less snow than last winter.

The almanac, which is now in its 212th edition, makes its forecasts using a "secret formula" devised in
1792 by the almanacs' founder, Robert B. Thomas, with some help from modern scientific calculations,
according to its Web site. There is a disclaimer: "It is obvious that neither we nor anyone else has as yet
gained sufficient insight into the mysteries of the universe to predict weather long-range with anything
resembling total accuracy."

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