Natural Gas Prices Heat Up
COSTELLO: Hurricanes Katrina and Rita hit hard in so many ways, including energy production. And government researchers now say we could see some heating costs up nearly 50 percent this winter. With 55 percent of homes using natural gas, owners can expect to pay nearly $1,100 more this season if the weather is typical. Now, if it's much colder than predicted, expect to pay an extra $1,200. For some ideas on what we can do to save money, let's check in with David Kolata. He's the executive director of the Citizens Utility Board, which is based in Chicago. Good morning.</s>DAVID KOLATA, CITIZENS UTILITY BOARD: Good morning.</s>COSTELLO: So, we're hearing -- I mean, there are reports everywhere. But we're hearing in the Midwest, the price for natural gas could go up as much as 77 percent. That just seems crazy to me.</s>KOLATA: Yes, it's going to be a tough winter for consumers. It was -- we were at record highs already before the hurricanes hit. Then after the hurricanes, it made a bad situation worse. So, this is going to be a very tough winter for consumers. And, you know, we need all the help we can get to make sure we can pay our bills.</s>COSTELLO: But, you know, David, we hear about the rising, you know, price of oil. And we know the oil companies are making all of this money. Couldn't we say the same of the utility companies come this winter?</s>KOLATA: Well, it's absolutely true. I mean, on the one hand, there are some legitimate reasons for the price spike. More of our natural gas is being used to generate electricity. So, demand has increased, raising prices. But the last time prices spiked about four years ago, at the time the utilities said, hey, there is nothing we can do about it. It's simply the laws of economics. And lo and behold it turned out that there was the Enron scandal and a whole bunch of market manipulation going on. So, consumers have reason to be skeptical of these high prices. And, you know, we hope that the federal government will do everything in its power to make sure that...</s>COSTELLO: Well, what can...</s>KOLATA: ... the markets have integrity.</s>COSTELLO: What can the consumer or the federal government do?</s>KOLATA: Well, let me start first with federal government. After the Enron scandal, there was -- they set up a market monitoring unit at the Federal Energy Regulatory Commission. We hope that the market monitoring unit will take a proactive stance to ensure that, in fact, customers are paying a fair price, to look at the system ahead of time instead of retroactively to make sure no one is gaming the system. As far as what consumers can do, I think there are two big tips. First, most utilities have a budget plan. And now would be a good time to sign up for that. This won't save you money over the course of a year, but it will even out your payments, which will help the family budget.</s>COSTELLO: OK, pause right there...</s>KOLATA: Second, if...</s>COSTELLO: Pause right there, because I know that Chad had a question about exactly that thing. Go ahead, Chad.</s>KOLATA: Sure.</s>MYERS: You know, also you can lock or you can float. And right now, it's about the same price, about a buck 75 a therm. I also want to know from you, what is a therm? I can get my hands around a gallon. I can get my hands around a barrel.</s>KOLATA: A therm is...</s>MYERS: But it's 100,000 BTUs. What does that mean?</s>KOLATA: A therm is simply a unit of heat, a unit of consumption, a measure of energy.</s>MYERS: How do I know when I've used one?</s>KOLATA: Well, you know, the utilities are coming out. They read your meter. And that shows up on your bill. So, certainly this would be a good time for people out there if you've ever thought about investing in energy-efficient technology, now would be a good time to do it. The typical home can save about 25 to 50 percent on energy bills simply by investing in new insulation and high energy-efficient windows. So, it's a little more expensive right now, but the payback, given the high energy costs, this winter will be very quick.</s>COSTELLO: David, let's go back to the therm, because I have heard -- you know, the gas company comes out and it will read your meter every three months or so, right?</s>KOLATA: Sure, yes.</s>COSTELLO: But because energy prices are going to be so high this year, isn't it better to have them read your meter every month? Because if you're doing energy-saving things, you want to reap the benefit in your savings month to month, right?</s>KOLATA: Absolutely. And in most states, you can request the people come out and actually do a meter visit. And we would encourage consumers to do that. We would also encourage consumers to call their attorney general or their consumer advocate organization in their state if they have any questions about their bill. Sometimes, especially when prices spike, we see there are billing errors. And if you go to our Web site, www.citizensutilityboard.org, there will be contact information for all attorney generals and consumer advocates in all 50 states.</s>COSTELLO: OK. I'm sure everyone is writing down that Web site. And we'll get it to you. Just send us an e-mail, and we'll get it to you. David Kolata, thank you so much. We appreciate it. Oh, we're over. From the Time Warner center in New York, I'm Carol Costello along with Chad. "AMERICAN MORNING" starts right now. TO ORDER A VIDEO OF THIS TRANSCRIPT, PLEASE CALL 800-CNN-NEWS OR USE OUR SECURE ONLINE ORDER FORM LOCATED AT www.fdch.com.