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Southcentral natural gas utility's customers hit with big increase in bill

  • Author: Sean Doogan
  • Updated: September 29, 2016
  • Published July 1, 2014

Beginning this month, Southcentral Alaska customers of Enstar -- the state's largest natural gas utility -- will be digging deeper into their pockets to pay their bills.

Effective July 1, Enstar customers will see their average monthly bill increase by 48.5 percent, according to John Sims, Enstar's director of business development.That's a jump of $39.97 for the average residential customer.

Enstar said the increase is mainly due to a carry-over from the second quarter of 2014 -- April to June -- when it overestimated the amount of gas its customers would use.

Enstar, which serves more than 137,000 customers (residential and commercial) from Homer to the Matanuska-Susitna Borough, buys natural gas from several producers, including ConocoPhillips, Buccaneer Energy, Cook Inlet Energy and Hilcorp. Each contract has different terms, Enstar said, but in general, the more gas it buys, the cheaper it is.

In part because of an unusually warm Southcentral spring, Enstar's customers used far less natural gas than the utility had budgeted for. That meant Enstar had to pay considerably more for the gas it used in the second quarter. The extra cost -- 32 cents per 100 cubic feet of natural gas used -- is being passed on to customers.

"Our (second-quarter) estimates turned out to be too optimistic," Sims said.

But Enstar said it won't be making a profit on the increase. As a regulated gas utility in Alaska, Enstar is prohibited from making money on the cost of the natural gas it sends to its customers, instead making its profits from the delivery of that gas.

And while a 48.5 percent jump in natural gas bills seems huge, Enstar said the increase is in line with its pricing history. Usages and prices for natural gas fluctuate seasonally. And even without adjusting for inflation, the current rate Enstar is paying for natural gas is more than 10 percent less than it was five years ago.

In total, natural gas costs went down from the first to second quarter of 2014 by about 31 cents per hundred cubic feet of gas used. The increase from the second to the third quarter this year is almost identical to the earlier decrease, meaning Enstar gas bills should return to what they were at the beginning of 2014.

Enstar said it doesn't expect to see another big price hike this year.

"Looking at the number estimates, we do not expect the fourth quarter (October to December) to be higher than the third quarter for this year," said Dan Dieckgraeff, Enstar's director of rates and regulatory affairs.

Strike looms

The increase comes as Enstar is facing a possible strike by about 150 full-time and temporary workers. Enstar's operations, clerical and temporary staff are represented by the Plumbers and Pipefitters Union Local 367, which notified Enstar on Monday that its members had voted to authorize a strike -- which could come as early as Sunday, according to a press release from the union.

The union claims that on June 10, Enstar walked away from the bargaining table after months of negotiations. Enstar's last offer was soundly rejected by union members. At issue is a combination of health and retirement benefits as well as wages.

"Enstar at this point has refused to indicate that they are willing to make any movement," said the union's business manager, Greg Walker.

If a strike happens, it would be the first time Plumbers and Pipefitters Local 367 walked off a job. While both sides said they want to avoid a strike, Enstar said it was prepared for one if it happens.

"We will continue to try to get them (the union) back to the table so that we can reach a mutually acceptable agreement for our employees," Sims said. "But Enstar has a contingency plan in place, and we would continue operations, although there is no question that there would be some departments impacted."

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