Soaring Gas Prices Loom Over Payson

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Payson area residents may be rummaging underneath sofa cushions and turning their pockets inside out to stay warm this winter.

Energy officials report the demand for natural gas is rising daily throughout the United States, which will likely cause bills to soar past records this winter.

And even though the Payson region is heated almost entirely by propane and electricity, residents will not be able to sidestep skyrocketing rates.

Proportionate prices

Natural gas is a clean-burning fuel found underground.

Propane also is clean-burning and is produced by either refining crude oil or what is called "cracking" the natural gas stream and separating propane from the other gases present in the stream.

Crude oil and natural gas prices are unusually high, and because propane is made from the two fuels, its prices are rising proportionately, said Baron Glassgow, director of field services for the National Propane Gas Association and executive director of the Arizona Propane Gas Association.

Just how much prices will rise is anyone's guess.

"There are so many different variables," Glassgow said. "It depends on natural gas and crude prices, whether it's an (unusually) cold winter ... Nobody knows. It's a question that (propane companies) have to go through every year when they decide how to buy their propane. Everything at this point is a guess."

Mark Lorentz, division manager of Energy West, where nearly 10,000 Payson area residential, commercial, and industrial customers get their propane, said he has no choice but to raise prices.

Considering last year's highest propane rate in the Payson area last winter was $1.99 per gallon, a 10- to 15-percent increase could end up equaling $2.30 per gallon and possibly more.

Glassgow said families using propane could see their bills increase, in some cases as much as hundreds of dollars.

Electricity

Most Payson area residents who do not choose propane as their heating source opt for electricity.

Arizona Public Service Area Manager Jan Parsons said APS serves about 20,000 residential and commercial customers in the Payson district, which includes Pine-Strawberry, Star Valley, Christopher Creek, Tonto Basin, Forest Lakes and Young.

In the past eight of nine years, APS has reduced its rates. Now it is proposing a 9.8-percent increase that could be approved by the Arizona Corporation Commission in mid-2004.

"Natural gas prices are going up, the amount of distribution lines that we've built to serve our customers are going up and the number of customers are going up," she said. "We made an agreement with the Corporation Commission to reduce rates 15 percent and at end of rate reduction period, we could file for a rate increase, and we're there. This will be the last year under the terms of the 1999 regulatory settlement that we reduce rates."

If approved, the rate increase would be the APS's first in 13 years. Based on the average usage of 1,100 kilowatt-hours of energy, the average residential bill would increase from $94.33 to $103.57 per month, according to a recent APS press release.

Parsons said part of the reason electricity rates, like propane rates, will likely increase is due to higher natural gas prices.

According to the same press release, the cost of natural gas to run APS plants for retail customers has jumped 500 percent from about $30 million in 1999 to more than $180 in 2003.

Minimizing the damage

Lorentz said there are several steps customers can take to minimize price increases.

Energy West delivers propane to its customers two ways: in tanks and through an underground system of pipes.

Lorentz urged customers who use tanks to take advantage of the company's customer appreciation sale beginning Monday and ending Sept. 15.

Customers will pay $1.49 a gallon for propane and if they fill up now, the fuel could last them most of the winter, depending on the size of the tank. Considering prices could spike to more than $2, Lorentz said this is the best pricing customers will see for a while.

Customers who get propane through the underground system can sign up for a payment plan that will average out their bills throughout the entire year instead of large winter bills and small summer ones.

APS also offers a similar payment options called the equalizer plan, Parsons said. She suggested customers visit www.aps.com to sign up.

For more information about Energy West, go to www.ewst.com.

Representatives of the Payson area's other major propane provider, Matlock Gas, refused to speak with the Roundup.

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