Kentuckians will pay an average of 17 percent more this winter to heat their homes with gas, but in Central Kentucky and other areas served by Columbia Gas, the price will increase as much as 31 percent.
The price spike has been caused by an increase in wholesale natural gas prices, Andrew Melnykovych, spokesman for the Public Service Commission, said at a news briefing in Frankfort on Wednesday.
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Gas prices peaked in the summer, when tremors in the global financial market caused frightened investors to pull money out of stocks, pumping it into commodities such as corn, oil and natural gas, inflating their prices.
"It was a speculative bubble that ran up commodity prices" to record levels, Melnykovych said, adding that there was little prospect for significantly lower natural gas prices "anytime in the near future."
In Kentucky, 44 percent of families heat with natural gas, using an average of 10,000 cubic feet a month.
About half the natural gas for winter heating is bought and stored in the summer, when demand and prices are usually lower.
Kentucky's five major natural gas distribution companies expect their wholesale cost in November to be, on average, $11.70 per 1,000 cubic feet. That is up $2.24 (nearly 24 percent) from an average of $9.46 per 1,000 cubic feet a year ago. The November price would be well below the August average of $15.17 per 1,000 cubic feet. The wholesale cost has declined $3.47, or 23 percent, in the last three months, as the commodities bubble has burst.
The wholesale cost of natural gas accounts for about three-fourths of a typical consumer's winter bill, according to the PSC. A typical Kentucky customer using 10,000 cubic feet next month will pay a total monthly bill of $150.78, up $22.38 — or 17.4 percent — from the $128.40 average bill a year ago.