‘Record high electricity prices this winter’ | VailDaily.com

‘Record high electricity prices this winter’

Nicole Frey
Preston Utley/Vail DailyKyle Otte of Xcel Energy checks meters Thursday in Vail.

EAGLE COUNTY – “No matter what happens, we’re going to have record high electricity prices this winter season,” says Jim Williams, an Arkansas-based energy economist for WTRG Economics. “Hurricanes Katrina and Rita took a very large portion of the U.S. production (of natural gas) offline,” Williams said. “There’s not enough natural gas production or import to heat homes in the winter.”I’m not saying there will be shortages, but it will be tight, and prices will go up,” Williams says. Holy Cross Energy, which provides electricity to most of the Eagle Valley, buys its power from Xcel Energy, which supplies electricity to the towns not serviced by Holy Cross, like Minturn.

As Xcel uses natural gas to produce about 48 percent of our electricity, Xcel spokeswoman Margarita Alarcon said rising natural gas prices will definitely translate to higher rates for consumers. The increasing prices have been a trend for several years, Alarcon said. Unfortunately, the effects of Katrina and Rita have exacerbated the problem, she said. “We anticipate that it’s going to be a rather challenging winter,” Alarcon said. “We’re seeing an increase of natural gas prices and electricity, and we’re entering the winter months, which means consumption will go up.”And as Xcel increases its prices, Holy Cross follows suit. For a residential average of 625 kilowatt hours, Holy Cross charged $7.18 more in October than in September. Xcel estimated its prices for the same amount of power next month will be $15.80 more than October in Colorado. “If natural gas prices stay where they are today, I don’t expect (electricity) prices to go up,” said Delvan Worley, general manager of business operations for Holy Cross Energy. “I would hope that natural gas prices are at their ceiling, but I’m not an expert.”Defying Worley’s tentative predictions, natural gas prices are estimated to increase another 5 percent by the end of the year, according to numbers provided by the Energy Information Association.

While mounting natural gas prices are increasing electricity bills, Xcel customers are also paying for Xcel undercharging consumers earlier this year, said Xcel spokesman Tom Henley. Xcel is now entitled to reclaim those lost dollars, he said. “Summer temperatures were higher than normal in 2005, which has increased natural gas demand for electric generation,” Xcel reported. Problems were compounded by the derailment of a Colorado-bound train full of coal, forcing Xcel to rely more heavily on natural gas for electricity production. However, even though prices are escalating, the region is better off than others around the country.”You’re benefiting because your area is isolated,” Williams said. “You’re a fairly large producer (of natural gas) relative to your consumption.”While the situation looks grim now, Williams said the mountains have something to look forward to. “Prices will drop next year because the stuff will get fixed in the Gulf and production will go up again,” he said.

Jonathan Cogan, an energy information specialist with the Energy Information Association supported Williams theory. According to Cogan’s numbers, next winter’s prices will be about 25 percent lower than this year’s. “There isn’t anything you can do about it now but work to get it repaired,” Williams said. Staff Writer Nicole Frey can be reached at 949-0555, ext. 454, or nfrey@vaildaily.com. Vail, Colorado

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