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Natural gas back up to $1 per therm

Natural gas costs are going up again, with residential customers of Northern Indiana Public Service Co. paying more than a dollar per therm in May.

Posted on May 3, 2008 at 1:00 a.m. | Updated on May 3, 2008 at 11:54 a.m.

MERRILLVILLE -- Natural gas costs are going up again, with residential customers of Northern Indiana Public Service Co. paying more than a dollar per therm in May.

The price per therm of natural gas has been steadily rising for NIPSCO customers since October 2007. In April, the price jumped nearly 20 cents to 95 cents in April and for May is surging almost 15 percent from the prior month to $1.09. Customers have not paid more than a dollar per therm since the winter of 2005-2006, when Hurricane Katrina disrupted the supply of natural gas from the Gulf of Mexico.

Utilities across the country are dealing with rising natural gas costs brought on by a tightening of supply and increasing demand. In Indiana, Vectren Corp., which serves the southern part of the state, and Citizen Gas, a municipal utility which serves the Indianapolis area, are having to pass along the rising cost of the commodity to their customers as well.

"It's not looking good for consumers," said Chase Kelley, spokeswoman for Vectren.

Vectren customers are paying 99 cents per therm and Citizen customers are going to see an increase of about $3.50 in their bills for May. The cost of the natural gas is a pass-through cost for the Indiana utilities, meaning customers pay what the company pays at the wellhead.

"We're doing everything we can to secure the lowest cost for the customer," said Nick Meyer, spokesman for NIPSCO. "We can't control the price but we are looking for the lowest price and to lock in rates."

According to Proliance Energy, one of the largest natural gas suppliers in the United States, natural gas prices reached a record $13.91 per million cubic feet in October 2005. Since falling to $8.40 mcf in February 2006, it has not returned to double digits until May 2008 with the current price of $11.28 mcf.

"We're concerned about that," said Dan Considine, spokesman for Citizens Gas, "because moving forward, if these prices continue we could see a significant impact this fall."

Until about two years ago, more natural gas was consumed in the winter months because it was used for heating, Kelley explained. Now more of the commodity is being used to generate electricity, which drives the unit cost up in the summer as consumers turn on their air conditioners.

On top of this, both Kelley and Considine said, supplies are expected to get tighter as electric utilities turn from burning coal to using natural gas in order to meet clean-air standards and federal restrictions prevent exploration for natural gas on environmentally protected lands.

Contact Marilyn Odendahl at modendahl@etruth.com.




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