Grab your checkbook: Cost of natural gas projected to climb

COLUMBIA -- Winter heating costs are likely to increase this season, but only time and Mother Nature will tell whether South Carolina residents feel a bite or nip in their wallets.

As things stand now, most natural gas customers can thank a base rate case for what is to be a slight decrease in their monthly gas bills.

But if expected fuel cost hikes hit, those savings will likely be erased at the same time South Carolina households are dealing with higher prices for everything from gasoline to food. And electric bills through much of the state are slated to rise starting next year with a proposed rate hike.

Currently, the average S.C. Electric & Gas customer can expect November's natural gas bill to be $163.27 -- about a $5 dip from a year ago, when that customer paid $168.25.

However, nationally, an Energy Department report released Tuesday predicts the price utilities pay for natural gas will increase by just under 10 percent.

In South Carolina, utilities are allowed to pass such costs directly on to customers.

For Midlands residents, such in increase in the price paid for natural gas would cause the average customer's bill to increase to $171.63, according to Dukes Scott, executive director of the S.C. Office of Regulatory Staff, the state's utilities watchdog.

Bills usually rise through February as temperatures get colder. The winter heating season, when SCE&G charges a higher rate, runs from November through March.

SCE&G has 300,000 natural gas customers in the state, and a little more than half use natural gas for heating.

Meanwhile, consumers using fuel oil to heat their homes are likely to get an even steeper hit, with prices expected to jump by 22 percent between October and March. Surging crude oil prices are the primary culprit for the jump in fuel oil costs.

Such predicted winter heating increases could be further muted by mild weather and other factors, including a solid surplus supply built up by SCE&G, said Eric Boomhower, spokesman for Columbia-based parent company SCANA Corp.

But even a mild winter might not help. The National Oceanic and Atmospheric Administration Tuesday released a forecast for a milder than average winter in most parts of the country but said temperatures will be 1.3 percent colder than last year.

Still, Boomhower said even with a 10 percent hike in fuel costs during January -- typically the peak heating season -- natural gas bills for consumers will likely be about the same as in 2007.

But in January SCE&G's electric customers are due to see their bills increase.

The utility, providing service to more than 630,000 customers, asked to increase average residential rates by $7.62 per month, increasing bills to $108.72 per month.

Scott's office is still studying SCE&G's request and is likely to contest the proposal. A hearing is scheduled for Nov. 1.

As for natural gas, Scott said utilities appear to be doing what they can to control increases. Part of the problem, though, is many -- including SCE&G -- rely on natural gas more during the summer months to generate electricity.

Still, Scott said the utilities have done a good job of building up their natural gas surpluses. "We're almost at record storage," he said.

In recent weeks, natural gas futures prices have held or even dropped even with the government forecasts.

But all of this could turn around if oil prices stay high and electricity plant operators switch to natural gas for units that can burn either fuel, said Ron Denhardt, CEO of Strategic Energy & Economic Research, in Winchester, Mass.