MINNEAPOLIS (AP) -- Customers on Minnegasco's budget plan are already feeling the effects of rising natural gas prices.
The plan, which 38 percent of the Minneapolis-based utility's customers participate in, allows users to spread winter heating costs throughout the year. On average, budget-plan customers can expect to pay $20 a month more than last year, beginning with this month's round of bills, said Minnegasco spokesman Rolf Lund.
Customers of other utilities such as Minneapolis-based Northern States Power Co. also can expect to see higher natural gas prices when their bills arrive, as natural gas prices are rising to their highest levels in decades.
The U.S. Department of Energy predicts that natural gas users could see their highest heating bills in 15 years this winter.
With production down and consumption up, wholesale natural gas prices are about 50 percent higher than they were at the same time last year, said Vince Chavez, supervisor of the natural gas unit at the Minnesota Department of Commerce's Energy Division.
Residential natural gas consumers in Minnesota are receiving bills that are 20 to 30 percent higher than they were at the same time last year, and there's no way to predict what will happen this winter, Chavez said.
Consumer rates aren't rising as high as the wholesale percentage increase because natural gas represents only about 70 to 75 percent of a customer's bill. The balance of what a residential customer pays is local distribution costs, which are regulated by the state and have remained stable.
Chavez wouldn't speculate on how high prices could rise this winter, saying that prices could rise dramatically if consumption increases because of a colder winter or longer heating season.
The wholesale cost of natural gas is not regulated by the federal government, so marketers, also known as natural gas traders, can charge local distributors whatever the market will bear, Chavez said.
Minnegasco serves 685,000 Minnesota customers, mostly in Minneapolis and surrounding suburbs, who heat their homes or commercial buildings with natural gas. Northern States Power Co. serves 500,000 natural gas customers in St. Paul and its western suburbs and in Wisconsin, North Dakota, South Dakota and Michigan.
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