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Enstar bill increase looks big but is temporary

By | July 3, 2014

Enstar customers will pay more for their natural gas this summer, but Enstar’s spokesperson says, it’s not quite the dramatic change that it seems.

Getting an Enstar notice saying gas prices are doubling is shocking. But flip out; it’s not a permanent increase. John Sims is the director of business development for Enstar Natural Gas. He says that natural gas bills always change throughout the year.

Here’s what happens: Enstar has contracts with different gas producers in Cook Inlet. They set prices for how much Enstar is going to pay. Then Enstar estimates how much they think they will buy each quarter.

“First, we are tasked with the challenge of trying to forecast what the weather is going to be like for the next three months. And then we have to try to forecast what 137,000 customers are actually going to consume over that three month time frame.”

Sims says they forecasted this year that they would buy lots of gas during the winter at high prices. So customers paid high prices. When April hit, Enstar saw customers paid too much, so they decreased the prices. But then it warmed up. And people used less gas. And Enstar realized that they under collected for the second quarter. To make up for it, they are increasing the prices again.

“This over collection, under collection happens pretty much all the time,” he explains. “In every filing that we do on a quarterly basis. It’s just a little more extreme compared to prior years.”

Sims says that the 48% increase is misleading. It’s because people buy so little gas in the summer. The percentage would be much lower if the cost was spread out over more units of natural gas.

“If you look at your total cost for the entire year, you’ll find it’s pretty consistent to years in the past.”

Sims says Enstar won’t make any money from this quarter’s increase, just like they didn’t lose any money when they decreased costs in the spring. It’s just paying for the actual cost of the gas. Enstar makes its money from delivery fees.

Sims says the company is anticipating a slight decrease for rates in the fourth quarter. He says overall, this year’s natural gas prices will be fairly consistent with last year’s. Yearly natural gas prices are influenced by the producers in Cook Inlet.

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