Steamboat Pilot & Today

Steamboat Springs — In the last two months, the price of natural gas has jumped 48 percent -- and Steamboat Springs residents are feeling the impact on their gas bills.

In mid-March, Atmos Energy, the company that provides natural gas to Steamboat Springs, increased the charge for gas from 50 cents to 62 cents for every 1,000 cubic feet of gas. Then, at the beginning of April, the price increased again to 74 cents for every 1,000 cubic feet of gas.

Mike Lehmann, operations supervisor for Atmos Energy, said the increase is a direct result of the rise in natural gas prices across the country. Atmos Energy is not making any money on the increases, he said.

Lehmann is coming before the City Council tonight to talk about the 48-percent price hike. Atmos Energy was put on the agenda after Councilman Bud Romberg said he had received complaints from residents about the rate hikes.

"The council wanted (Atmos) to come in and have the chance to ask questions," Steamboat Deputy Manager Wendy DuBord said.

Lehmann attributed the rise in Atmos' gas prices to the increased cost of gas last winter.

"What we are charging, we have already spent," Lehmann said.

By the time users started to rely heavily on natural gas in November, Atmos Energy had already locked into prices for 41 percent of the gas needed until March.

That left 59 percent of natural gas at the mercy of the free market and open to price fluctuations.

Lehmann said there is a lag between the time when Atmos buys natural gas at higher costs, and when the customer gets charged for the increase. That means Atmos was undercharging customers most of the winter for almost 60 percent of natural gas its customers used.

Because Atmos is a monopoly, the Public Utilities Commission has to approve any rate increases, even if it is just to adjust for the national cost of gas.

Xcel Energy is requesting the commission allow the company to adjust its prices on a monthly basis.

If Excel is successful, Lehmann said Atmos could follow.

In the next few months, Lehmann said the gas companies are buying, or "hedging," gas for the coming winters.

Gas is generally cheaper in the summer months, but Lehmann said Atmos does not buy all the gas it needs for the coming winter at once because prices could always go down.

In the summer months, Lehmann said natural gas prices are usually around $2 to $3 per million cubic feet.

This spring, the value has risen to about $6 and some experts predict it could increase to $10 by next winter, Lehmann said.

High natural gas prices are usually not any better news for gas companies than they are for residents.

Companies' profits come from the volume of natural gas sold, and when prices increase, volume sold generally tends to go down. Also, when gas prices are high companies have to cover larger amounts when users don't pay their bills, he said.

Even with the increase in natural gas prices, Lehmann said rates are still lower than they were two years ago.

He also said the increase in natural gas has little to do with the war in Iraq or the increase in the price of oil.

"It is as simple as supply and demand," he said.

-- To reach Christine Metz call 871-4229

or e-mail cmetz@steamboatpilot.com