Utilities don't profit from higher energy prices, but they do pass along the cost to their customers in higher fuel adjustment charges. And while natural gas prices have fallen in recent weeks as moderate weather set in across the country, the fuel adjustment charges on customer's bills lag two months behind real energy prices. That means the power bills that go out this month will still reflect the higher natural gas prices recorded a couple of months ago.
In June, natural gas prices climbed as high as $5.17 per million British thermal units, up more than 20 percent compared with June 2009. Prices have since fallen and stood at $4.35 on Wednesday.
That's down from two years ago, when Louisiana officials declared an energy emergency to give utility customers more time to pay their bills after natural gas prices reached more than $13 per million Btu in July 2008.
"I think you're kind of seeing the middle ground between those two ranges of fluctuating natural gas prices," said Philip Allison, a spokesman for Entergy Louisiana, which serves Algiers, suburban New Orleans south of Lake Pontchartrain and a handful of customers in St. Tammany Parish.
At Cleco Power LLC, which provides power in St. Tammany and central Louisiana, a typical monthly residential bill for 1,000 kilowatt hours of power has risen more than $13 from this time last year, a spike the company attributed partly to the $304 million acquisition of a 580-megawatt natural gas power station in Acadiana in February.
"It is going to be a big benefit to customers," Cleco spokeswoman Robbyn Cooper said about Acadia Power Station Unit 1. "However, in the short term, it's probably going to take two to three years for customers to start seeing that saving."
Local utilities officials have spent months appealing to customers to take steps to manage their power use, which has become a summer ritual. To help reduce utility costs, they recommend replacing air filters; sealing air leaks; closing curtains during the day; and keeping thermostats at 78 degrees, because each degree below that increases bills by 3 percent.
Entergy officials also recommend that customers sign up for level billing, which allows for paying about the same amount for electricity every month, summer or winter, average over a 12-month period based on usage.
"It really helps them ride through months like we're having right now," said Melonie Hall, director of customer service for Entergy New Orleans.
Meanwhile, for the second straight year, Entergy New Orleans customers sweating through the sizzling conditions should be in for some relief: On the heels of a collective $30.3 million rate reduction that went into effect last summer, a typical monthly residential bill dropped by more than $3, compared with this time last year.
That's more than an $18 drop from a typical residential power bill in August 2008, when natural gas prices skyrocketed. Earlier this year, Entergy officials proposed reducing electric rates again, by $12.8 million, while raising gas rates by $2.3 million, for an overall savings of $10.5 million to customers, starting in October, months after the region's period of most intense electricity usage has ended as temperatures cool down.
"That's good news for our customers," Hall said. "Even though the heat is not good news, the base rate reduction is."
As thousands of Gulf Coast residents struggle to pay their utility bills, a group of elected and community officials from throughout the region have joined with representatives from Entergy's Louisiana companies to urge the Obama administration to release $20 million from a federal emergency contingency fund to help cover fuel and air-conditioning costs.
The federal program, known as the Low Income Home Energy Assistance Program, was budgeted at $58.2 million last year in subsidies for heating and air-conditioning costs to 21,000 homes across the state.
Richard Thompson can be reached at rthompson@timespicayune.com or 504.826.3496.
Times Picayune 8.22.2010
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