As home heating costs continue to squeeze consumer budgets, the blame game also escalates.
Homeowners fault the weather - here and elsewhere - as home heating fuel originally intended for the Northeast is diverted to the Midwest and other regions where last summer's heat and this winter's single-digit temperatures have spiked the demand.
The situation can also be blamed on insufficient pipelines, big business, deregulation, exported energy, the government and foreign powers. Of course, the bottom-line problem is one of supply and demand.
Statistics from the trade and regulatory organizations which track the costs of electric heat, propane, oil and natural gas - the primary fuels used for home heating - indicate that the increases have hit every sector of the industry.
John Rancourt, owner and manager of Island Propane, confirms the bad news for Vineyard customers purchasing home heating propane. "Seventy to 80 per cent of our customers use propane for heating," Mr. Rancourt says. "Last year, our average heating customer - the person who uses propane for heating, hot water and cooking - paid $1.21 per gallon. As of the first of this year, they're now paying $1.64 per gallon." At an average use of 150 gallons per month, the homeowner paid about $181.50 last year. With this year's added cost, plus increased demand because of colder temperatures, the cost comes to $328 a month.
Norman Bellerive, the manager at the Amerigas office in the airport business park, said the company's terminal in Providence, R.I., has historically supplied 90 per cent of the liquefied petroleum gas (propane) that comes to the Island and to southern New England. "A lot of the [propane] gas which is typically here in the Northeast has been diverted to the Midwest," he said, and "that's left our supplies at a minimum." The diminished supplies, in combination with an increasing demand for propane in home heating, has contributed to the price rise. The demand for propane on the Island topped off at about one million gallons a year 10 years ago, Mr. Bellerive said. "That number is now in excess of four to five million gallons a year."
On the Cape, natural gas - the pipeline equivalent of propane - is also sending household budgets into a tailspin. In a series of statewide hearings this month, consumers have expressed concerns that delivery companies which have applied to the state for a midseason price hike, should not pass on added costs to customers when they're still able to take hefty profits.
The delivery companies say the supply and demand situation is beyond their control - that record temperatures last summer and this winter, drilling cutbacks in potential new source locations for natural gas, and price hikes on the commodities market have added substantial burden to their own costs. While not concerned with running out of fuel, the companies are concerned with the increased costs they've been paying to purchase that supply.
A commission at the state Department of Telecommunications and Energy is days away from a decision that, if approved, would allow oil delivery companies to raise their natural gas prices by anywhere from 47 per cent to as much as 66 per cent over last winter's prices. Translated to a dollar amount, an average monthly bill of $172 for home heating with natural gas could rise to $286.
Representatives on both sides of the negotiations are seeking to find an ameliorating solution to the proposed increases, so that neither distributors nor consumers have to absorb the full brunt of the situation.
For those who use oil as the primary heating fuel - an estimated 43 percent of all Massachusetts homes - the picture isn't much prettier, although the cost per gallon is less than for propane.
Jean Cummiskey, director of public information for the Massachusetts Division of Energy Resources, which tracks oil heating costs, says that as of Jan. 16, 2001 the average statewide price for oil was $1.51 per gallon. This dropped to $1.49 on Jan. 22. Last year at this same time, the average consumer price was $1.17 per gallon.
Ralph Packer, president of R.M. Packer Co. Inc., says his company charges $1.699 per gallon for home heating oil, and that if purchased on a cash basis, the price is 10 cents less per gallon. Mr. Packer says that 80 per cent of the company's customers also choose to pay their bills within 10 days, a purchase plan which gives them a price break of eight cents per gallon.
"Our service people have also mentioned to us that while the efficiency of electric and gas heat have not improved, the efficiency of oil burning equipment has improved by about 50 per cent over the years," Mr. Packer said. "What this means is that 15 or 20 years ago, half of every $2 spent on oil was used to heat the house and half went up the chimney. With more efficient heating equipment, a great deal less goes up the chimney," he said.
This year has also proven challenging for households which rely on electricity as the primary source for heat. Customers of NStar (the former Commonwealth Electric Company) have seen an increase of about 15 per cent over last year on the energy side of their electric bills. The price increase is directly related to the increased costs companies have paid to generate electricity. In New England, natural gas and oil are used to generate electricity; these fuels are at a 15-year and 10-year high, respectively.
Although the increase in electric rates is substantial, Mike Monahan, director of media relations for NStar, says that the New England area is better off than other regions of the country. "When the electric industry was deregulated in Massachusetts on March 1, 1998, the industry built in some flexibility in the law, saying that should there be an increase in the cost in the fuel needed to produce electricity, that the companies can flow these direct costs to the consumer. If you stop and think about it," he says, "it's the way that any industry operates. If the cost of raw material to produce a product or service increases, then consumers end up paying that cost. Everyone's aware of what's going on in California, and a big reason for that is that they do not allow their companies to flow through these costs.
"The other difference between here and California is that California has a big problem - a lack of supply, and not a single new power plant brought on line in 10 years. In New England, new power plants came on line last year, some this year, and some scheduled for next year. We're in better shape overall."
While the pinch continues to be felt in most households, there is some help available for those on limited budgets. Energy assistance programs available for Vineyard residents include the following:
The Massachusetts Division of Energy Resources has a toll-free telephone number for specific information on state assistance programs. The number is 1-866-ENERGY-7.
On the federal level, the Low Income Home Energy Assistance Program (LIHEAP) distributes funds to states to help low-income households pay heating bills. Contact your local heating oil dealer to find out if you qualify, or visit the program's web site at www.acf.dhhs.gov/programs/liheap/states.htm
Consumer Guidance, a nonprofit corporation in Washington, has also established a grant fund to help people having financial problems because of high energy costs. Consumers can obtain a free grant application for help by calling (202)595-1035, or by visiting the organization's web site:
Comments
Comment policy »