HEAT BILLS MAY BURN SOUTHLAND GAS USERS.

Byline: Chris Sieroty Staff Writer

High heating bills, an anomaly in sunny Southern California, could be found this winter as natural gas reaches record prices, potentially driving up bills by 25 percent.

The price of natural gas futures declined slightly Thursday, as October natural gas fell 7.3 cents to $4.998 per million British thermal units.

But earlier this week, gas futures rose above $5 per million Btu for the first time. That prompted analysts to warn consumers that they should expect higher prices this winter.

A typical residential bill for a Southern California Gas customer is expected to rise to $93 from last winter's $67, said Denise King, a spokeswoman for Sempra Energy, parent of Southern California Gas.

Natural gas analysts say several factors could make the situation even worse and could have a damaging effect on the region's strong economy.

Ron Barone, managing partner of research at Paine Webber in New York, said increasingly gas is used to generate the turbines that make electricity, and there has been a decrease in the amount of drilling for natural gas in recent years.

He also said industry in the United States has been consuming more gas during the long-running economic expansion, and there has been a decrease in storage levels nationwide.

``We have 400 billion cubic feet of natural gas less in storage this year than we had last year,'' Barone said.

Barone explained that to meet the demands of winter there is usually 3 trillion cubic feet of gas stored nationwide, this year there is only 2.6 trillion cubic feet.

``Utilities like Southern California Gas are already paying twice as much for natural gas as we did last year,'' King said. ``We pay 56 cents per therm compared to 23 cents per therm last year.

``A therm contains 100 cubic feet of gas,'' she said.

With natural gas prices at the wholesale level continuing to rise, it's just a matter of time before consumers alter their spending habits.

``It's going to be a bigger part of their budget, which could cut down on their disposable income,'' Barone said.

Jack Kyser, an economist with the Los Angeles Economic Development Corp., agreed, saying, ``It's going to slow some types of consumer spending, especially on luxury items, because consumers are already dealing with high gasoline prices.''

``We won't really see the economic impact until the first cold snap,'' Kyser said. ``It's a delayed-reaction bomb. You read the story in the newspaper, but the first time they really take notice is when they get their first bill and see the higher charges.''

Gas usage for this winter may be higher than the last if temperatures are cooler than forecast. If that's the case, King says consumers could experience an additional 15 percent increase in prices.

However, Stuart Seto of the National Weather Service in Oxnard says winter temperatures are predicted to be above normal in Southern California.

Analysts say the high cost of natural gas is expected to come down a bit next year, when oil and gas companies begin to reap the benefits of an increase in drilling.

Dave Costello, an economist with the Energy Department's Energy Information Administration, said those efforts are too little, too late to provide any relief this winter.

``A new pipeline into the Chicago area will open this winter,'' he said. ``It's not clear on (what will be) the net gain on supply, but it probably won't make that much difference.''

GAS BILL QUERIES

Southern California Gas customers with questions concerning rate increases can call [phone] or visit www.socalgas.com on the Internet.

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