Natural-gas prices likely to remain moderate

Natural-gas prices are rising just in time for the winter heating season. But local utility officials say their customers will still see lingering benefits from prices that hit seven-year lows in the summer.

Peco Energy Co. said yesterday that it had completed filling storage facilities that it can draw upon on the coldest winter days, when the major interstate pipelines that supply the region are unable to fully meet demand.

Peco spokesman Michael Wood said that the utility, which serves 485,000 gas customers in Philadelphia's suburbs, bought and stored gas at depressed summer prices, significantly lower than a year ago.

The summer cost is significant because about half of Peco's winter price is based on gas purchased in the off-season, gas that is compressed and stored in underground caverns or liquefied at -260 degrees Fahrenheit and held in a huge tank in West Conshohocken that acts like a giant thermos.

The market price for natural gas on the Transcontinental Gas Pipe Line in the mid-Atlantic states hit a seven-year low of $2.07 per thousand cubic feet on Sept. 4. The price yesterday was $4.80, below the seven-year average of $7.50.

Natural gas hit $14 in summer 2008, just before the stock market crashed, the economy stalled, and demand fell. Meanwhile, gas developers discovered new supplies in formations such as the Marcellus Shale, which lies under much of Pennsylvania.

Customers have already seen the benefit of lower commodity prices, though they account for only part of the rates they pay.

Philadelphia Gas Works, which serves 500,000 city customers, has lowered residential rates 28 percent since 2008. The city-owned utility charges $1.53 per 100 cubic feet of natural gas.

PGW has stored 18 billion cubic feet, nearly a third of its annual volume of more than 60 billion cubic feet, said Cameron L. Kline, the utility's spokesman.

Most of PGW's gas is stored underground in Western Pennsylvania, where it can be drawn on short notice.

But PGW also operates the region's largest liquefied natural gas (LNG) storage facility in Port Richmond, which can store up to 4.1 billion cubic feet of gas.

"Our objective is to get the best prices for our customers all year," said Kline.

South Jersey Gas, which serves 340,000 customers in the Garden State, has socked away 400 million cubic feet of gas at its LNG site in McKee City, Atlantic County, said company spokeswoman Marissa Travaline.