Niagara Mohawk Residential Gas Bills Heading Toward 58% Increase in January 2009

Residential natural gas customers of Niagara Mohawk d/b/a National Grid can expect to see a 58% increase in their winter heating bills next January. A customer using 200 Therms would see the January bill go up from $220 in 2008 to $348 in 2009.

The chart below shows the history of Niagara Mohawk January residential gas bills from 1997 to 2008, plus a projected bill for January 2009. Click to enlarge:

The chart is based on the Typical Bill reports of the Public Service Commission, which regulates Niagara Mohawk rates. The January 2009 bill was estimated by PULP based on Niagara Mohawk's forecast of the Monthly Cost of Gas. That predicts a 76% rise in the cost of the gas from January 2008 to January 2009. When the cost of gas is combined with other elements of the bill the net increase estimated by PULP is 58%.

Actual usage and bills of course will depend on the size of a home or apartment, energy efficiency of heating equipment and the structure, the interior temperature that is maintained, and weather. Also the price of gas could change between now and then.

Niagara Mohawk is purchasing nearly all of the gas its customers need for the 2008 - 2009 winter at this year's prices, which were sharply higher in the first half of the year, as shown by this chart.

As a result, even if market prices for natural gas were to moderate later in the year, it is likely that next winter's National Grid gas bills will be very high.

Gas companies in some states buy ahead for two or three years and so their prices change more gradually. The New York PSC, however, encouraged gas companies not to buy more than a year ahead in order to introduce more volatility into retail prices. It is achieving that goal, to the detriment of consumers on low and fixed incomes.