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California utilities are bracing for a financially tough winter heating season for their low-and moderate-income customers. Natural gas procurement prices are expected to run substantially higher in the coming cold season than last winter. Federal grants to help low-income customers pay their utility bills are not keeping pace. “We do know it’s going to continue the upward trend we’ve seen for years,” said David Eisenhauer, Pacific Gas & Electric spokesperson, about natural gas prices this coming winter. To help keep rates affordable to customers, he said the utility is scrambling to carry out programs aimed at helping customers conserve energy. The company tries to keep its gas procurement costs down, he said, by buying and storing gas when prices are low and purchasing the commodity through long-term agreements under which prices are predictable. Even then, he noted, “gas prices are volatile.” This January, PG&E expects to pay 24 percent more to procure gas for residential customers than it did last January. This is expected to translate into an average residential gas bill of $116.89/month, including the cost of gas and utility service. That’s up from $101.42/month last January--an increase of 15 percent. The expected gas bill increases come on top of higher electricity bills under a rate increase approved by the California Public Utilities late last month in light of the higher cost of obtaining gas to run power plants. That rate increase is expected to hike the average electricity bill 4.1 percent, though it could be higher. PG&E expects to hone in on a precise figure early next month. Concern over the impact of higher gas prices on Californians this winter prompted the state’s major gas utilities to sign a letter to Congressional leaders last month urging increased funding for the Low Income Home Energy Assistance Program (LIHEAP). PG&E, San Diego Gas & Electric, and Southern California Gas joined in the letter with a coalition of utilities and low income energy assistance program administrators and advocacy groups. Due to rising energy costs, the coalition said, the purchasing power of low-income program grants has declined for natural gas. In 2003, LIHEAP payments covered 58.2 percent of the average gas bill. Last year it was 37.6 percent. The same is true with electricity. Last year LIHEAP covered 37.1 percent of the average electricity bill compared to 50.1 percent in 2003, the coalition added. “As costs go up the ability of low income customers to pay goes down,” said Tim Reese, California/Nevada Community Action Partnership executive director. “The money in California is grossly inadequate.” The coalition is seeking $5.1 billion in federal funding for LIHEAP, $3 billion more than this year’s $2.1 billion. The proposed funding increase bogged down in the U.S. Senate due to a hold placed on the measure by Republicans. An attempt to cut off debate and force a vote on the funding increase failed in the Senate late in July and no headway has been made on the proposal since then. “To date, all efforts to increase funds for California have failed,” said Val Martinez, executive director of the Redwood Community Action Agency, which provides weatherization and energy assistance to low income residents in Humboldt County. “I’m fully expecting we’re going to have a very difficult year providing services.” Funding limitations mean only a small percentage of eligible California residents get help with their energy bills under the federal LIHEAP program, she said. Limited funding assistance also is coinciding with a spike in unemployment. Nationally the unemployment rate climbed from 5.7 to 6.1 percent in July, the latest figure available from the Bureau of Labor Statistics. California was particularly hard hit with a 7.3 percent unemployment rate. Only three states had higher rates. The mean expenditure on natural gas in the coming year is expected to hit $1,915, according to the National Community Action Foundation. That is up $555 since 2001, a 40 percent increase. Bills are expected to be higher this winter than even during 2005, the year that Hurricane Katrina put a crimp in gas supplies. Nationwide, the National Energy Assistance Directors Association projects that as many as 15.6 million households could face utility shutoffs due to inability to pay their energy bills. While Pacific Coast residents can expect to see higher gas prices this winter, according to the Energy Information Administration’s September 9 forecast, the increase is not expected to be as steep as in other parts of the nation. Residential gas prices are expected to average $13.36/thousand cubic feet in 2008 and dip a bit next year to an average of $13.30/per thousand cubic feet. But that’s up from an average of $11.98/thousand cubic feet last year. By comparison, the price of gas per thousand cubic feet for residential customers is expected to hit an average price of $18.18 in New England in 2009 and $18.33 in the South Atlantic region, the Energy Information Administration projects.

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