Aug 12, 2008 11:18 pm US/Central
Natural Gas Price Guessing Game Means Higher Bills
(WCCO)
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Many customers use a budget plan to even out the pain. CenterPoint re-evaluates those budgets twice a year setting the price consumers pay based on the future price of natural gas. (File)
CBS
Thousands of Minnesota homeowners who use budget plans to pay their natural gas bills may want to re-think that strategy. Earlier this summer CenterPoint Energy warned that the cost to heat our homes could jump 35 to 45 percent when the weather gets cold.
Many customers use a budget plan to even out the pain. CenterPoint re-evaluates those budgets twice a year setting the price consumers pay based on the future price of natural gas.
Most of the 200,000 people on CenterPoint's budget plan pay based on CenterPoint's July 1 estimate of the future price of natural gas. The futures market priced natural gas back then at more than $13 for one million BTUs, which is how natural gas is measured. Now it's about $8.50 for one million BTUs.
So customers are facing a huge increase in their bill because of a projection that now maybe off the mark.
Pauline Johnson and her husband were shocked over their latest budget plan bill.
"My new budget for the next six months is $197 and it was $101.83. That's an increase of 93 percent," said Johnson, making her think about going off the plan.
"But then I thought about what the bills would be this winter. And actually still haven't made up my mind as to what is the best thing to do," Johnson said.
CenterPoint said six months from now the Johnsons will get credit if they overpay.
"Every six months we will go through and make the adjustment," said CenterPoint spokesperson Mary Ann Warner.
But one expert says with energy prices this volatile, the budget plan may not be a great deal for consumers.
"The projections are going to be horribly wrong one way or another over the next year and a half because we have had such a run-up in prices," said Professor George John of the Carlson School of Management.
While CenterPoint likely overestimated the price this time, there are other times when it underestimates. Either way the company says you end up paying for what you use.
(© MMIX, CBS Broadcasting Inc. All Rights Reserved.)
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