What’s been happening in recent months?
Why are gas prices so high?
What is We Energies doing to control the price of natural gas?
What can I expect in the future?

What’s been happening in recent months?
Utilities throughout the country who purchase and distribute natural gas have experienced record high prices in recent months. This, along with the colder temperatures in January and February (2003) have translated to higher bills for consumers. Temperatures between January 1 and mid-March were 28% colder than last heating season.

As you know natural gas is used in many Midwestern homes for heating, cooking and water heating. What you may not know is that local utilities like We Energies don’t produce natural gas or own natural gas wells. We purchase natural gas for our customers from distant suppliers much like gas station owners purchase gasoline for fueling automobiles. Under state regulation, we cannot make adjustments to the gas price beyond adjusting for our own costs. In other words, price fluctuations—up or down—are reflected in your monthly gas bills; however, we do not profit from these fluctuations. The natural gas is transported through underground pipelines and delivered to your through our local network of pipes. It is the delivery of natural gas that is our business—not the production of natural gas.

Why are natural gas prices so high?
Natural gas is a commodity that is bought and sold in the marketplace, where we purchase it for our customers. The price of natural gas follows the basic economic laws of supply and demand. This means when supplies are tight, prices rise.  Because of supply and delivery challenges in recent years, gas prices have generally been higher.  During the heating months of 2003, natural gas demand was much greater than available supply. There are several reasons:

• Drilling for natural gas has declined and is not expected to increase significantly anytime soon.
• A cold winter has caused more gas to be used to heat homes and buildings.
• Power plants are becoming increasingly reliant on natural gas to generate electricity.
• The interstate pipelines that carry natural gas to our system are nearing capacity.
  

What is We Energies doing to control the price of natural gas?
Since we can’t control the market price of gas, we’re working on other ways to help offset high gas prices.

• We purchase from several sources in a competitive marketplace.
• We purchase extra gas in the summer—when prices are usually lower—and store it for use during the heating months.
• We’re also addressing the pipeline capacity issue. A new pipeline—the first to be built in Wisconsin in ten years—went into operation earlier this year. This pipeline allows us to bring additional natural gas into our service area using a variety of competitive suppliers.
  Learn about natural gas pipeline projects

What can I expect in the future?
Natural gas-fueled powers plants throughout the country are using 25% of the total U.S. natural gas consumption---twice what was used ten years ago. This reliance on natural gas to fuel power plants will continue to put pressure on the supply and demand of natural gas. We think natural gas is a fuel that’s best used for heating homes and businesses, water heating, and industrial processes. But it’s not the best fuel for power plants that run 24 hours a day. That’s why we’re proposing coal as part of our project to expand our electric generating units to meet future energy supplies. This project is called Power the Future.

Go back to natural gas pricing page.