By Dan Shaw, Evansville Courier & Press
The price of natural gas is likely to rise from 25 percent to 30 percent this winter over what it was a year ago.
That's what Niel C. Ellerbrook, chairman and chief-executive of Vectren Corp., told investors at an annual meeting Wednesday.
"If you think prices are high now, fasten your seat belts because I'm not sure we are near the end of this," Ellerbrook said.
Under Indiana law, a utility company can charge customers what it paid to produce the gas they use. In coming weeks, those who pay for gas under a budget-billing system will receive notices informing them of how much those charges will rise because of the high cost of natural gas, Ellerbrook said. In budget billing, Vectren charges customers a set fee every month instead of one that fluctuates in proportion to their use of gas.
Ellerbrook said the high costs are largely the result of an increased demand for natural gas. Concerns about pollution from coal have many utility companies burning natural gas to produce electricity. The price has risen accordingly.
During the 1990s, the average cost of natural gas had been around $2.50 a dekatherm. It is now projected to around $11.30 in June, Ellerbrook said.
Another reason Ellerbrook predicts energy prices will continue to rise: Politicians plan to place constraints on the amount of carbon dioxide industries may emit. He said both Democratic presidential candidates - Sens. Barack Obama and Hillary Clinton - say they want to cut such emissions by 80 percent before 2050. And Sen. John McCain, the presumed Republican nominee, wants to reduce them by 60 percent by the same year.
To meet those goals, industries will have to buy more equipment that prevents pollutants from leaving their smokestacks.
"Ultimately the cost to consumers will reflect what those constraints will be," Ellerbrook said. "We are looking at high energy costs into the future."
Owing to concerns about pollution, many favor burning more natural gas to produce electricity, Ellerbrook said. But that is an inefficient way of using gas, which is best for directly powering things such as furnaces and water heaters.
Any attempt to overcome the energy crises will have to depend on coal, Ellerbrook said. New equipment must be invented to ensure the coal found in Indiana, which contains a high amount of sulfur, can be burned cleanly.
Ellerbrook also called for more money to be invested in nuclear power. And supplementing all of these projects should be the use of renewable sources of energy, such as wind and sunlight.
Vectren has already agreed to buy as many as 30 megawatts of electricity from wind turbines being built in Benton County, in the northwest part of Indiana. But Ellerbrook said society cannot end its energy troubles merely by building more wind farms.
Their biggest drawback is that they are not always a constant source of power. In Evansville, for instance, the wind seldom blows on hot August days, when everyone wants to run an air-conditioner, Ellerbrook said.