GRU customers will see a price hike

Oil prices, war fears fuel increase


Published: Saturday, March 1, 2003 at 6:01 a.m.
Last Modified: Saturday, March 1, 2003 at 1:04 a.m.

You won't see a fee for "wartime anxiety" listed anywhere on your next power bill.

But if you get your electricity from Gainesville Regional Utilities, you'll definitely be paying for it.

GRU officials say utility customers are going to pay more for natural gas and electricity in the March bill, thanks in part to war jitters that caused prices for oil and natural gas to spike last week.

"We're a victim of what I call 'ballistic pricing,' " GRU analyst Ed Regan said. "The price of gas has shot up like a rocket."

Gainesville's city-owned utility took an unexpected hit in recent weeks as the cost of natural gas nearly doubled during the month of February. Bad weather is partly to blame: February's winter storms created an intense demand for gas, driving prices higher nationwide.

Gas prices were higher than normal even before the storms because of chaos in Venezuela, the world's fifth-largest oil exporter. Most of America's supply of natural gas is domestically produced, but because many industries can use either fuel oil or natural gas, increases in the price of oil typically lead to increases in the price of natural gas.

Things got still worse in the last week of February, when wartime anxiety led to the highest oil prices in years. The price of oil spiked to nearly $40 a barrel Thursday, the highest prices the country has seen since the days before the first Gulf War in 1991.

GRU passes its fuel costs on directly to its customers. That means the utility's average natural gas customer will pay about $11 more than usual for gas for the bill they receive in early March. GRU officials say the average March gas bill for a residential customer is about $44.

But even if you don't have natural gas, you're not off the hook. While most of GRU's electricity is generated at the coal-fired Deerhaven 2 power plant, about one-third comes from the gas-fired Kelly plant downtown. That means the average electric customer will pay about $4 more than usual this March. GRU officials say the average customer's electric bill for early March - February is typically a low-consumption month - is about $65.

"Customers might not even notice," GRU spokesman Dan Jesse said. "People typically use less power (on the March bill) than in (the February bill), so even with the increase, your bill will probably be lower this month than it was last month."

It's the second gas-related price increase announced by the utility in the past six months. In November, GRU warned that the average electric customer's bill would go up by about $5 a month. At that time, gas prices had spiked because of hurricanes that wrecked drilling platforms in the Gulf of Mexico. And GRU officials warned then that prices would rise again as the nation drew closer to possible war in with Iraq.

"For what it's worth, we're not alone," GRU analyst Cassandra Glass said. "People across the country are paying higher prices for electricity."

That's partly because other utilities, like GRU, have opted to use natural gas to generate a significant part of their electricity. Gas-fired plants produce virtually no air emissions, compared with coal-fired plants, which have been blamed for producing much of the nation's air pollution. But coal is cheaper than gas, and prices for it are far more stable.

Regan said the current turmoil in energy markets may set off a nationwide debate about which fuel should be used to generate electricity.

"It think America is about to have a big conversation about which fuels we really need to use," he said. "Current events are making that unavoidable."

Tim Lockette can be reached at 374-5088 or lockett@gvillesun.com.

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