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National Fuel cuts gas rates by 13% Warm weather causes lower market price

The warm January weather will pay off through lower natural gas costs this month.

The rate that National Fuel Gas charges its residential customers this month is 13 percent less than its January rate, as warm temperatures across the nation have pushed gas commodity prices down sharply.

But heating bills still will be a bigger burden than ever on Western New Yorkers. Even with the drop, residents will be paying the highest prices that National Fuel has ever charged during any previous February and 20 percent more than they paid during this month last year.

While the drop in February rates will offer some relief for National Fuel's 450,000 residential customers in New York, the company still estimates that average heating costs this year will soar by 33 percent to $1,256, compared with $944 last winter.

"The good news is that prices are down for February," said Julie Coppola Cox, a National Fuel spokeswoman. "The bad news is that prices are still higher than we'd like to see."

Consumers also are catching a big break from Mother Nature. Temperatures were 26 percent above normal during January and have averaged 11 percent warmer than usual since the beginning of November, according to the National Weather Service in Cheektowaga.

Those warm temperatures, coupled with conservation measures many residents took because of the soaring prices, have allowed National Fuel's customers to use less gas to heat their homes this winter. Gas consumption was down by 6 percent in November and December, Cox said. Figures for January were not yet available.

The warm weather, both here and across the country, also have caused natural gas commodity prices to plunge as supplies remained robust through January, the month when National Fuel's customers traditionally use the most gas.

Natural gas commodity prices have plunged by 43 percent since hitting a record high of $15.38 per 1,000 cubic feet on Dec. 13 to close at $8.72 on Wednesday.

Because National Fuel locks in most of its gas supplies before winter begins to smooth out the price swings caused by shifting commodity prices, the overall rates the company charges rise and fall much less than the market price for natural gas. For instance, National Fuel's February rate is 20 percent higher than it was a year ago, while commodity prices, despite the recent decline, are 34 percent more than they were at this time last year.

"We're following the trend, but it's not as dramatic in either direction, which is what the strategy is designed to do," Cox said. "It's never been a one-to-one impact when you look at commodity prices in the marketplace and the costs to our customers."

While the January rates are down, the projected 33 percent increase in heating costs from November to March still is within the 30 percent to 40 percent range that company officials have been predicting since last fall. If those forecasts hold true, consumers will spend about $313 more than last year, and 44 percent more than the average over the last five winters, according to National Fuel statistics.

Natural gas commodity prices have more than quadrupled over the past five years. Demand for the fuel has grown because of its increased use by businesses and factories as the economy strengthened and new power plants that burn natural gas came on line.

At the same time, gas production has struggled to keep up and supplies remain tight, with slightly less than 17 percent of the daily gas production in the Gulf of Mexico still shut down in the wake of Hurricanes Rita and Katrina, according to the U.S. Minerals Management Service.

Yet because the winter across the country has been mild, natural gas supplies remain robust, which is helping to push prices down as available supplies outstrip the immediate demand. Gas inventories are 22 percent above the average for the last five years, according to the U.S. Department of Energy.


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