2008 was a Rollercoaster Ride for Consumer Energy Costs

In early 2008, the U.S. Department of Energy (DOE) predicted a significant percentage increase in natural gas costs for the winter of 2008, at times predicting as much as a 30 percent cost increase for customers in the Southern region over last winter. The trend in rising energy prices nationwide and across the board was undeniable. This was not good news for customers of MLGW.

Although MLGW cannot control the price of energy, the Division works to reduce the impact of rising power costs in the following ways: discounted supplies of electricity and natural gas through long-term prepayment contracts; strategic purchases of natural gas; price protection of these purchases by using a combination of futures, options and market pricing; and continuous efforts to help shape the direction of federal and state electric restructuring to ensure access to reliable, low-cost electricity supplies.

And now the good news:

TVA rate decrease – On January 1, 2009 the Tennessee Valley Authority cut electric rates by approximately 6 percent to account for lower fuel costs. The savings should equal about $4 to $8 a month per residential customer, depending on usage. The change reflects a 25 percent reduction in TVA’s fuel cost charge, which is adjusted every three months. This will be the first decrease after three successive quarterly increases.

Natural gas costs continue to drop – December Dept. of Energy (DOE) figures showed the cost of natural gas for the Southern region was $14.25/mcf, down 25 cents from November’s forecast. January 2009 figures show natural gas costs to be $13.54/mcf. The Henry Hub natural gas spot price is projected to decline from an average of $9.13/mcf in 2008 to $5.78/mcf in 2009, but then increases in 2010 to an average of $6.63/mcf. More detailed information, which is updated monthly (next update Feb. 10), can be found at the Dept. of Energy’s website.

Gasoline prices look good for 2009 – Also according to the DOE, economic contraction in 2009 and lower projected crude oil prices are expected to result in annual average retail gasoline and diesel fuel prices in 2009 to $1.87 and $2.27 per gallon, respectively.

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