Energy costs go up during the winter months, but next spring, the prices won’t go down as the weather warms.
Natural gas and electric utility companies hiked rates by approximately 20 percent on Oct. 1 due to a dramatic rise in the cost of the resources. This increase will affect Oregon and Washington but only minimally impact many Eugene residents.
The main cause of the price increase stems from the construction of a new natural gas pipeline carrying the resource from Canada to the Midwest. The Pacific Northwest, which receives most of its natural gas from Canada, was suddenly faced with competition for the gas, resulting in the significant increase in wholesale prices to the utility companies and new power plants, most of which run off gas.
Lisa Schwartz, a policy analyst for the Conservation Resource division of the Oregon Office of Energy, said the sudden high demand has caused gas companies to redouble their exploration efforts for new sources of natural gas.
“If you drive up demand, and supply hasn’t increased, prices are going to go up,” Schwartz said. “Gas companies expect it will take two years before increased supply may lead to decreased prices.”
A strong economy is also a factor in the increased prices. Anytime there is an economic boom, there is an increase in energy use as more businesses expand and houses are built, Schwartz said. Without an increase in the supply of natural gas, which has been flat for the last few years, the price increase could last as long as two years before prices begin to decline.
Fortunately for most Eugene residents, the price hikes will only affect Oregonians who receive fuel from Northwest Natural Gas. Northwest Natural Gas — Oregon’s largest natural gas utility company, supplying 80 percent of the state — increased prices by 24 percent for the 470,000 accounts it serves. Gas bills will increase by about $60 per year for each account, Northwest Natural Gas spokesman Steve Sechrist said.
Eugene Water and Electric Board, a publicly owned utility, will not be increasing its rates.
EWEB will keep costs down by using wind power and hydroelectric power from the Bonneville Dam, which has its rates fixed through October 2001, said John Mitchell, EWEB’s public relations director.
“We implemented all rate increases in April of 2000 — the first increase since 1993 — and will not have a rate increase during 2001,” Mitchell said. “It may affect the [price of the] small amount of power we buy on the open market, but EWEB will absorb that cost and not pass it on to customers.”
Traditionally, utility companies such as Northwest Natural Gas make their incomes in service charges for transporting gas, hooking up gas in new houses and businesses and other services, Sechrist said. Last month’s price hike will be passed on to the customers of utility companies, he said, but the companies will not be making any profit from the increase.
“Wholesale prices [of natural gas] have doubled since the beginning of the year,” Sechrist said. “We’re trying to make customers understand we’re not making money off of the gas on raising the prices.”