Heat costs crunch businesses

50 percent gas price hike hurts

Little relief is in sight for consumers and businesses struggling with skyrocketing heating bills. Rate hikes in the past year and earlier this month mean most will see heating bills twice as high as last year.

The Colorado Public Utilities Commission on Jan. 5 approved a whopping 40 percent rate increase requested by Xcel Energy for its customers in Colorado, with the hike taking effect the next day. Together with two other increases in the last year, it means many heating bills have doubled within the last 12 months.

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Xcel said it won’t see any boost to its bottom line from the rate increases, including the latest one that totaled $360 million.

“We don’t produce gas. We don’t explore for it,” Xcel spokesman Mark Salley said. “We purchase gas in the marketplace. As those costs fluctuate, we pass the costs on to customers.”

Salley said spot prices for natural gas have quadrupled in the past year, prompting Xcel to ask, and receive, three rate hikes from the PUC. Xcel has requested a separate rate increase totaling $39 million to cover costs of pipelines, meters and other system improvements.

And while the PUC had the authority to deny the latest request, commission spokeswoman Barbara Fernandez said it had no choice but to grant Xcel’s request for the $360 million hike.

“There really is no option. We just administer the commodity costs,” she said.

And a survey of Northern Colorado businesses finds few options available for them, either.

“It’s clearly going to affect us in our costs, but I can’t say how much right now,´ said Richard Beck, chief financial officer for Advanced Energy Industries in Fort Collins. “It’s a cost we aren’t going to be able to pass along. It’s just going to affect our profit line.”

Beck said contracts with the company’s customers have prices locked in and cannot be raised to cover increased business costs.

“We’re up against the same type of increases,” IBM-Boulder spokesman Ray Blomgren said. He added that IBM’s heating bill for November of last year was about 50 percent higher than November 1999.

But Blomgren said IBM budgeted for the higher heating costs and is not yet turning down the thermostat to save money.

“We have 5,000 to 6,000 people on site. We want to be as conservative as possible, but we need to be as efficient as possible, to make sure employees are comfortable and productive,” he said.

Guests and employees at the Hotel Boulderado in Boulder won’t feel a chill, either. “It’s a colder winter and what are we doing? We’re paying our bill,´ said Mary Ann Mahoney, public relations director for the hotel. “There’s not much else we can do.”

At least one Northern Colorado business, Kodak Colorado Division in Windsor, is already scrambling to find an alternative source of natural gas. Kodak had been supplied by Western Natural Gas but was notified in December that it would not be able to supply gas after Jan. 1. Kodak spokeswoman Lucille Mantelli said Kodak has signed a contract with another Colorado-based supplier to get through January but is looking for other long-term options.

“Now we’re looking at our options for the rest of the year,” she said. Mantelli said it’s unknown at present “what the exact impact of that will be until those negotiations are completed.”

While no layoffs are expected, Mantelli said the division may have to cut back on travel, supplies and other “controllable costs” to cope with the expected jump in heating costs.

While there’s little help for businesses’ record-high bills, residents have some resources available to help with their utility expenses.

The federal Low-Income Energy Assistance Program offers help to pay heating bills. Charlotte Jackson, LEAP staff support person for Weld County Social Services, said she’s seen “a very large increase” in the number of people seeking help from the program.

Benefits range from $100 to $700 per heating season and can be claimed by both homeowners and renters meeting income guidelines.