There’s nothing strange going on with natural gas prices to heat mid-Michigan homes. That’s the word from the Public Service Commission, the agency detailed to oversee utilities such as Consumers and DTE’s natural gas division.
Prompted by the recent coverage of BWL’s doings, an LSJ reader called to suggest a look into natural gas prices. The price on the bill was much higher than the price of natural gas, I was told.
And that’s true. But it’s also true that Consumers and DTE aren’t making up gas prices.
Judy Palnau of the PSC tells me that the state only allows the utilities to recover their cost of acquiring the gas. And why are prices higher than the market prices seen now?
Simple: Utilities got a bad result from buying at a good time.
Palnau explained that Michigan is unusual in having a great deal of storage space for natural gas. This situation leads utilities to buy gas during the summer months, when demand and prices are lower, to deploy in the winter months. Unfortunately, prices were higher this summer than they are now. The public’s paying eight-month-old prices. (The Energy Information Administration reports the “wellhead” price of gas went from 10.82 in June 2008 to 5.97 in November 2008.)
In most years, that would mean they were saving. This winter, they are not.
As for complaints about higher bills, which the PSC has received, Palnau offered another simple explanation: It’s been colder than in recent years — it takes more gas to keep your house heated.
