Jan 15 - McClatchy-Tribune Regional News - Alison Knezevich The Charleston Gazette, W.Va.


The average West Virginian's monthly utility bills rose 15.6 percent in 2008, driven largely by increases in the cost of natural gas and electric service, according to a study released Wednesday by the state Public Service Commission's Consumer Advocate Division.

That's the highest yearly increase since 2004, said Byron Harris, head of the Consumer Advocate Division.

Last January, the average utility customer in West Virginia paid about $264 a month for electricity, gas, water and telephone service. Today, the same resident pays about $305.

Over the past decade, utility rates in the state have risen 71.5 percent -- more than twice the rate of inflation during the same time period, according to the study.

High natural gas prices have fueled most of that decade-long increase, but now electricity prices have become a factor, too, Harris said.

Last year, spikes in market prices for coal and natural gas contributed to the increases in electricity and gas costs, respectively, Harris said.

"In 2008, all energy costs went through the roof," he said.

Late this year, customers might see some relief on gas bills, but it doesn't look good for electricity bills, he said.

"I think that for the near term, the forecast for electricity prices is not very optimistic," Harris said. "The cost of coal has come down, but not nearly as dramatically as natural gas or oil."

In January 2008, the wholesale price of natural gas was $7.17 per million British thermal units. That rose drastically through the spring and summer, reaching $13.17 in July.

Prices have fallen, but gas utilities had already bought significant amounts of gas at high prices in the summer, when they were refilling depleted storage reserves, according to the study.

Natural gas customers might see some relief in the fall, said Dave Lokant, director of operations at Mountaineer Gas Co.

"If [wholesale] prices would stay where they are now, prices [for customers] should go down in fall of 2009," Lokant said, but added he couldn't predict what would happen in the market. "Prices are down today, but the market is pretty volatile."

Harris also said he expects gas bills to go down late this year, but he, too, added a word of caution. "It certainly looks today that we're going to have a reduction in November," he said. "But keep in mind that between now and then, we have a hurricane season."

The PSC is "actively encouraging" utilities to engage in hedging activities to avoid spikes in commodity prices, Harris said.

That is easier said than done, said Mountaineer Gas president Tom Taylor. "While it seems like a good idea, there's a limitation of how much you can lock in based on the current credit markets," Taylor said.

As for electricity, officials at Appalachian Power do not expect prices to come down, said spokeswoman Jeri Matheney

Coal prices are "by far the biggest reason" in rising electricity prices, she said. But she also cited the cost of pollution control equipment, such as the scrubbers at the John Amos plant in Putnam County.

"We don't see coal prices going down drastically," she said. "Increasing amounts of regulation will also be a factor for years to come."

Last February, Appalachian Power and Wheeling Power requested the largest revenue increases ever in state history -- a 17 percent increase that would raise $156 million. Ultimately, the PSC approved an 11.35 percent increase for the power companies.

The Consumer Advocate study also compared utility costs by city. Morgantown residents have the lowest bills at about $278 a month, while Hinton residents have the highest, at about $326. Charleston residents pay about $322 a month.

On average, West Virginians pay about $4 less than the average of cities studied in Maryland, Ohio, Kentucky, Pennsylvania and Virginia, according to the study.

Pending rate increase requests this year include those for West Virginia American Water Co. and Hope Gas, Harris said.

Reach Alison Knezevich

at alisonk@wvgazette.com

or 304-348-1240.

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