Colder weather predicted to drive Michigan market up

Even if natural gas prices remain the same, predicted colder temperatures in Michigan will increase use and heating bills this winter, the Michigan Public Service Commission (MPSC) says in an assessment of state energy prices and availability. While the National Weather Service projects winter temperatures for Michigan to be near normal, they will seem cold compared to the last three winters, which averaged 7% warmer than normal.


Even if natural gas prices remain the same, predicted colder temperatures in Michigan will increase use and heating bills this winter, the Michigan Public Service Commission (MPSC) says in an assessment of state energy prices and availability.

While the National Weather Service projects winter temperatures for Michigan to be near normal, winter temperatures will seem cold compared to the last three winters, which averaged 7% warmer than normal.

Overall, energy supplies are expected to be sufficient this winter. However, homeowners who heat with fuel oil and propane will experience significant price increases, compared to last year as a result of higher crude oil costs and supply and inventory concerns, the commission said.

Michigan natural gas sales for the year 2000 are expected to increase to 903 bcf up 4.6% from sales in 1999. Natural gas prices on the spot market have risen to above $5/Mcf, up from around $3/Mcf just 1 year ago and are not expected to moderate any time soon.

However, the MPSC said Michigan is in better shape than other states thanks to the agreements reached with the state's biggest natural gas suppliers to hold prices steady.

Gas costs were frozen for customers of Michigan's three largest gas utilities�Michigan Consolidated Gas. Co. (MichCon), Consumers Energy, and Semco Energy Gas Co.�when the gas choice program was implemented. Recent price increases will not affect customers of these companies this winter.

However, Consumers Energy's frozen price program will expire Apr. 1, 2001, likely resulting in higher costs for Consumers' gas customers for the balance of 2001, the commission said. All other regulated gas utilities, serving fewer than 10% of Michigan gas customers, have had rate increases approved to cover the higher gas costs. Energy forecasters said customers of these utilities can expect their bills to increase by 23-43% this winter.

Michigan electricity sales are expected to grow only .7% in 2000, compared to the 3.1% growth seen in 1999, the commission said. Much cooler than normal weather this summer contributed to lower peak demands and lower electricity sales.

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