Not only is the gas crunch hurting at the pump, now its taking a bite out of home budgets as well.

Thursday, October 12, 2000

Not only is the gas crunch hurting at the pump, now its taking a bite out of home budgets as well.

It’s official – Austin Utilities’ customers will see a 34 percent increase in natural gas prices starting with the next bill. That translates to an increase of about $70 during the colder months to the average homeowner’s bill.

Austin Utilities General Manager Jerry McCarthy said the increase was unavoidable.

"We’ve been watching the price of gas go up and up since last spring," McCarthy said, explaining that the utility had budgeted for a cost of $2.92 per 1,000 cubic feet of gas, but now was looking at a price of $5.20 for the same amount of gas. "Even with some of our gas supplies locked in at a lower price, the best projection we could come up with showed our gas department with a $3.7 million shortfall if we didn’t increase the price to the customer."

The Austin Utilities board approved the increase to commercial, residential and industrial customers at their Tuesday board meeting. McCarthy said the board had been expecting an increase – and 34 percent was lower than the 40 percent increase staff had predicted the previous month.

The increase will come in the form of a purchase gas adjustment (pga) of 28 cents per 1,000 cubic feet of gas. The utility board went with the pga rather than an across-the-board rate increase because it gives the utility more flexibility to react to any fluctuation in gas prices.

"Doing it as a purchase gas adjustment allows us to adjust the price quickly, for example, if gas prices drop," McCarthy said. "Then we can pass the savings along."

McCarthy said the municipal utility can normally absorb price fluctuations, but in this case the fluctuation was too extreme.

Austin Utilities is not alone in its reaction to the price increase.

"It doesn’t make it hurt any less, but other utilities are faced with the same problem," he said. "We heard that NSP was increasing their rates by 32 cents and Owatonna by 24 cents per 1,000 cubic feet of gas."

McCarthy said information about tips for cutting natural gas consumption would be forthcoming; he also plans to meet with fuel assistance providers like Semcac and the Salvation Army as soon as possible so the utility can get information out to customers who might have problems paying the higher fuel bills.

"Supposedly there are federal funds headed this way to assist with winter heating bills," the general manager said, "but we don’t know when or how much yet."