Heating Bills Could Go Up, Way Up

Joyce Coates
Enterprise Staff
Colder than usual temperatures as 2018 begins are an omen of higher bills to come for homes and businesses, specifically, those heated with either propane or natural gas.  
Natural gas is a fossil fuel, and propane is a ‘green fuel’ but both burn clean and are deemed environmentally friendly.  Natural gas is a combination of propane, butane, ethane, and methane gases. Propane is processed with crude oil to separate it from the other components. Therefore, the price of propane that depends on the costs of natural gas and crude oil is usually higher. 
In mid-2009, Missouri Gas Utility (MGU) offered customers in Benton County free installation of natural gas service to replace their existing propane tanks and systems. Many accepted based on the expectation of lower monthly bills.  However, MGU’s plan, certified by the Missouri Public Service Commission (MPSC) in November 2009, was delayed for more than two years.
In March 2012, MGU acquired Southern Missouri Gas Company and changed the business name to Summit Natural Gas of Missouri, Inc. (SNG). The Public Service Commission approved SNG’s new request in July 2012 “to construct, own and operate a natural gas distribution system providing service in Benton, Morgan, Camden and Miller Counties in Missouri.” SNG’s territory has expanded since then.
 Natural gas is priced per 1,000 cubic feet (Mcf); propane is priced per gallon. For cost comparison, measure the energy content in British thermal units (BTU); i.e., the amount of heat required to raise the temperature of one pound of water by one degree, Fahrenheit.
Natural gas generates 1,030,000 BTUs per Mcf; propane generates 91,333 BTUs per gallon. One thousand cubic feet of natural gas equals approximately 11.3 gallons of propane. 
Records of the U.S. Energy Information Agency (EIA) show the average price from 2013-2017 in Missouri of a gallon of propane for residential use was $1.74, or $19.64 per Mcf.  Heating oil for commercial use for the same period averaged $1.93, or $21.78 per Mcf. (EIA records prices for propane during the heating season only, from October – March.)
EIA records various natural gas prices year-round, by state. One is the price at the “city gate”; the point or measuring station where the gas utility receives gas from a pipeline company or transmission system. The average price at a Missouri city gate for the period 2013-2017 was $5.77 per Mcf.  
The average natural gas price for the same period was $9.67 per Mcf for commercial use by nonmanufacturers that sell goods or services, and by local, state and federal agencies.  The average residential price for the period was $16.36 per Mcf.
“Doing the math” shows natural gas to be less expensive on average, to the satisfaction of some who opted for SNG service. Several propane users, however, believe they made the right decision not to switch.  Others who opted for natural gas have been increasingly disappointed because their monthly bills have been higher, not lower.
Summit Natural Gas is one of five distributors currently operating in Missouri, including Ameren, Empire District, Spire (formerly Laclede), and Liberty. Summit territory comprises five areas: Gallatin, Warsaw, Lake of the Ozarks, Rogersville and Branson. The Warsaw area includes Cole Camp, Greenridge and Lincoln. 
Linda Allcorn, director of Boonslick Regional Library, was asked about costs of natural gas service to the Warsaw branch and reported annual amounts that since 2014 have averaged a little over $3,500. This calculates to less than $300 a month, even counting an above-average bill in January 2017 for $743.18.
In contrast, J&D Pharmacy switched to natural gas, but after several months decided to incur the expense to revert to a propane system.  They made the decision because they were using more gas and paying significantly higher monthly bills. Using propane again is saving them money. 
Unable to afford reinstalling a propane system, Ayman Ielouch, owner of Warsaw Laundromat, is stressed about the high cost of natural gas. Energy consumption by his commercial-grade washers and dryers, plus the boiler and rooftop furnace is relatively stable year-round, he said, at approximately 1,130 cubic feet. 
His January 2017 bill for $1,662.73 was not as high as his February 2017 bill for $1,962.23. He is frustrated to know that service from Ameren, Laclede or Spire (formerly Missouri Gas Energy) would cost at least $700 less for the same volume of gas.
The Consumer Service department of Missouri Public Service Commission receives many complaints every year about high bills.  Yet, it can take no action against utility companies if they follow the regulations and charge rates approved by the MSPC. The Missouri Office of the Public Counsel represents the public and ratepayers as a class, but not on an individual basis.
Regardless of the service provider, components of natural gas monthly bills are calculated essentially the same. The Missouri Office of the Public Counsel defined the components as:
 1. Customer Charge: Covers a portion of the gas company’s fixed costs that it incurs to serve each residential customer. This charge allows natural gas utilities to recover customer specific expenses such as meter reading costs, billing costs and investments in meters and service lines. This charge appears monthly on a customer’s bill regardless of usage.
2. Commodity Charge: Covers all other costs to operate the business such as salaries, a return on investment and any other non-gas cost for running the business. The total amount of this charge varies based upon the amount of gas used by the residential customer.
3. Purchased Gas Adjustment Charge (PGA): The cost of gas purchased from producers of natural gas, the costs to store natural gas in storage fields and the cost to transport natural gas via interstate or intrastate pipelines from the production fields [to the city gate] for use by the residential customer.
A local natural gas company pays its suppliers a wholesale price that is not regulated by the Missouri Public Service Commission.  Primarily driven by supply, demand and the weather, it usually accounts for 55-60 percent of the total cost. Changes in wholesale prices are accounted for through revisions to the PGA charge.  
PGA in SNG’s five service areas was revised in November 2017.  Gallatin increased by $0.099; Warsaw and Lake of the Ozarks decreased by $0.0328, and Rogersville and Branson increased by $0.0064.
From December 2014 until November 2017, Warsaw area customers were charged the highest combined rates per 100 cubic feet (Ccf) in the state for both residential ($1.6004), and commercial ($1.5013) service, compared to rates charged throughout Missouri by all five companies.
After November, Warsaw area commodity charges for residential ($1.1340) and commercial ($1.0349) customers were still the highest. And, the residential rate (commodity plus PGA) for the Warsaw area is still the highest in SNG territory, and in the state, at $1.5676 per Ccf. Branson area service charges, $1.4801 per Ccf, rose to the highest in SNG territory for commercial services, only $0.0116 higher than Warsaw. 
In addition to the three standard charges, natural gas bills typically include amounts for taxes, franchise fees that are levied by the local municipality (city or town), and in some cases, infrastructure reimbursements to the utility company.  
Lizzy Reinholt, SNG’s media contact, responded in early October 2017 to questions about the Warsaw area’s high rates. She said SNG completed a “rate case” in 2014 that the Public Service Commission reviewed and approved. She added that “…the company brings natural gas to underserved or unserved rural areas… where the geography can impact the cost to deliver the gas.”  
Gallatin customers are charged considerably less than Warsaw’s: 50 cents less for residential and 39 cents less for commercial service, per Ccf. It could be said that the Gallatin area of eight cities or townships compared to four in Warsaw’s area, is no less “rural” with fewer than 300 more people within a wider territory.  
Lower costs where the population is greater does not always seem to be the case. For instance, rates for residential and commercial accounts in the Rogersville area comprised of 12 cities and townships, are $1.1879 and $1.2314 per Ccf, respectively; considerably lower than in Warsaw but higher than the $1.0722 and $1.0833 in Gallatin. 
Bottom line: Heating bills go up, sometimes way up, this time of year. Residential customers have some options for relief.  SNG’s budget billing formula spreads costs more evenly throughout the year.  Also, the West Central Missouri Community Action Agency has an energy assistance program for residential customers on fixed income. To be eligible, an applicant’s income must be at or less than 135 percent of the federal poverty level based on family size. 
Commercial customers may be able to get help through SNG’s “Commodity Charge Flex Provisions.” Reinholt described it as “the flexible rate structure that provides commercial customers an opportunity to work with us to find al alternative rate that suits the needs of both the customer and the company.