Thursday, March 27, 2014

Purchased gas adjustments add to natural gas bills during extreme cold

Customers are taking notice of the purchased gas adjustments (PGA) on their natural gas bills. Bills are higher than normal not only because of greater consumption of natural gas related to the severe and prolonged cold temperatures but also because the cost of natural gas we buy from suppliers has increased.

While the details of the transactions with natural gas suppliers are confidential, our purchases are audited by the Public Service Commission of Wisconsin to make sure that our natural gas purchases are prudent.

Widespread cold snaps led to unusually high demand for natural gas nationwide which, in turn, led to higher natural gas prices on the spot market. Although we purchase and store natural gas when the cost typically is lower, we depleted much of that supply due to the historically cold winter. We needed to purchase more natural gas on the spot market than in normal winters to meet customer demand.

PGA reflects what we actually pay for natural gas from our suppliers and is the only market adjustment for what we pay versus what we expected to pay at the time the base rate was set. If we can buy gas for less than our forecast, customers see a credit on their bill. If gas costs are higher than we expected, customers see a charge.

Keeping prices as low as possible

Our goal is to reliably supply natural gas at the lowest possible price. We employ several purchasing methods and use financial instruments to obtain the lowest price possible. Two ways to manage natural gas prices are storage and hedging:
  • Storage typically takes place during the summer months when natural gas cost typically is lower. The gas is stored in underground facilities with geological formations that can support redelivery throughout the year but particularly during winter months. We lease storage in Michigan, Iowa and Illinois because Wisconsin does not have natural gas storage formations. 
  • Hedging is the use of financial contracts to reduce the risk of large swings in natural gas commodity prices on the New York Mercantile Exchange (NYMEX). Hedging is a financial strategy that uses gas option purchases and futures contracts to cap and lock prices to reduce market swing risks. We currently hedge up to 60 percent of our natural gas supply requirements.

Breakdown of natural gas therm cost

Natural gas is measured in therms. A therm’s cost has three main components, which are indicated on customer bills:
  • Distribution — This charge covers natural gas delivery system operations, including improvements and maintenance of pipes and meters. This charge is set when a new rate order is approved by the PSCW and does not change until a new order is issued. 
  • Base — This charge is what we pay to suppliers and pipelines for natural gas as well as its transportation and storage. We do not keep any of the money collected to cover these costs. This amount does not change until a new rate order is issued.
  • PGA — This charge reflects the difference between the base amount and the actual natural gas cost. This could be a charge or a credit, depending on actual costs. We pass along these costs to customers without any benefit to our company whether a charge or a credit. Our PGA factor is set on the second to last work day each month for the next month’s bills. PGA amounts for customers vary somewhat based on number of billing days and amount of gas consumed.

Background on natural gas supply

Most natural gas in the United States comes from the Gulf of Mexico and Canada. Natural gas is almost 100 percent methane and comes from deep underground. Once out of the ground, natural gas is transported in high-pressure pipelines by pipeline companies. When it arrives at its destination, we distribute it to our customers through underground facilities connected to pipelines.

Supply vs. capacity — Supply is the term used to describe the natural gas commodity. We use competitive bidding to get the lowest possible cost. Because we have contracts with a number of suppliers, we spread our supply risk. Supply contracts can be seasonal or annual to ensure the best natural gas cost and availability on the coldest days. We purchase capacity from a number of interstate pipelines and underground storage owners, primarily under long-term contracts, to obtain capacity at lower costs for extended periods.

Natural gas costs on your bill — Three main elements make up a natural gas bill: supply, capacity and distribution. Supply cost, or the commodity itself, is passed on directly to customers. We do not profit from the supply cost. Capacity is the physical space in the pipe. Supply cost and capacity make up about 63 percent of the rate customers pay. Distribution cost covers the cost for us to provide natural gas service, including the underground distribution network, meters, billing and customer systems as well as operating expenses. This portion makes up about 37 percent of customer rates and is regulated and approved by the PSCW.

PGA (and prices) vary by location

Our parent corporation -- Wisconsin Energy -- has several businesses, including some doing business as We Energies. Wisconsin Electric is one of those businesses, and Wisconsin Gas, which was acquired by Wisconsin Energy in 2000, is another. While every effort is made to take advantage of economies of scale, the tariffs (prices) for the two natural gas utilities remain independent. The two natural gas utilities are Wisconsin Electric Gas Operations and Wisconsin Gas LLC, each serving different geographical areas, each requiring their own pipeline contracts and each having its own natural gas receipt points and, consequently, different costs that distinguish their pricing. These differences extend to separate natural gas purchase portfolios that are reflected in the PGA. The PGA also is blended for the different months covered between a customer’s meter reading (referred to as meter reading cycle). This is why some We Energies customers have a different PGA than others – depending on their meter reading cycle and whether they are in the geographical area served by Wisconsin Electric Gas Operations or the one for Wisconsin Gas LLC.

Tuesday, March 18, 2014

Winter heating cost update: Extreme cold increases energy bills; what to do

Based on weather data through mid-March, assuming normal weather in the second half of March and month of April, and the price of natural gas remaining where it is today on the spot market, we expect the average residential customer to pay about $739 for heating with natural gas this winter. The total is:
  • 34 percent more in winter heating costs than the past winter when customers paid $552. 
  • 16 percent less than 2007-08 when customers paid $878 while using 6 percent less natural gas. 
  • Less than four of previous 10 winters. 
The average residential customer would use 14 percent more natural gas than the previous winter and 20 percent more than the previous 5-year average.

Weather comparison
  • The combined average daily temperature from November through February was: 
  • The coldest in that time frame since 1976-77. 
  • The 8th coldest in that time frame since 1891-92. 
  • 21 percent colder than normal. 
More cold facts:
  • January 2014 was the 16th coldest month (ever) on record since 1891 and coldest January in more than 30 years. 
  • February was the 12th coldest February since 1891 and 26 percent colder than a normal February. 
  • So far this month, March has been 22 percent colder than normal. 
If March remains 22 percent colder than normal, and we have a normal April, this winter would be one of the 10 coldest on record since 1891.

Managing your costs

Along with the colder-than-normal winter come larger-than-normal energy bills, but you have some options that might help:
  • Saving energy. You can use energy more wisely going forward to keep more money available to pay bills and meet other needs. Energy-saving ideas 
  • Switching to budget bill. You can even out your payments and avoid spikes that can occur during cold winters and hot summers. You pay the same each month, with semi-annual adjustments for actual usage. Budget bill information 
  • Setting up a payment plan. You may qualify for a flexible payment plan to help you catch up on your bills. Payment plan information 
Want more information? 
Email or call us anytime at 800-242-9137.

Monday, March 17, 2014

Check overhead to keep you and natural gas meter safe from leaks

Mother Nature has been taking us on a roller coaster ride. One day it’s mild, the next it’s freezing. This constant freeze-thaw cycle can lead to potential problems around natural gas meters.

Usually we’re reminding you to remove snow around your meter. But this time of year, the bigger problem may lie overhead. If your roof has snow on it – beware. Melting snow can slide off your roof and onto your natural gas meter. Please remove any snow buildup on your roof to prevent this from happening. 

This natural gas meter is encrusted in ice. A dangerous 
situation that can lead to leaks. 
Icicles pose another problem. When it’s mild, they start dripping. A wet gas meter isn’t a problem, but a frozen one is – and that’s what happens when the temperature drops. Ice and snow buildup can damage natural gas meters, which could lead to potentially dangerous gas leaks. Keeping the meter clear ensures that we can get to it quickly in an emergency.

To avoid problems:
  • Remove icicles that may drip water onto the meter. 
  • Avoid kicking or hitting the meter to break away built-up snow or ice. 
  • Use a broom to gently brush snow off the meter. 
  • Always shovel away from the meter. 
  • Take care when using a snow thrower or plow near your meter. 
If you smell a natural gas odor, leave the house immediately and call our natural gas emergency number at 800-261-5325 from a nearby phone.

Tuesday, March 11, 2014

Falcon shot, injured; authorities search for suspects

2nd peregrine falcon found dead

We are sad to report that a peregrine falcon that has nested at one of our power plant nest boxes has been shot. The adult female falcon from our Milwaukee County Power Plant was found injured recently in West Allis. The bird was unable to fly and in obvious distress. The falcon, named Madame X, was taken to the Wisconsin Humane Society’s Wildlife Rehabilitation Center (WRC) where she is receiving around the clock care.

Madame X gets care at the Wisconsin Humane Society's 
Wildlife Rehabilitation Center.
Madame X has suffered extensive injuries. She has several shotgun pellets lodged in her body. She also has a broken coracoid (collar bone) and likely will not fly again. But she is showing signs of improvement, and the staff at the rehabilitation center is impressed by her feistiness and hearty appetite.

Authorities believe Madame X was purposely shot and are asking for the public’s help in making an arrest. The falcon was found at 2 p.m. on Feb. 27 in a yard outside the Cocktails and Dreams tavern at 55th and Grant in West Allis. Anyone who heard or saw anything unusual in this timeframe is asked to call the West Allis Crime Stoppers at 414-476-CASH (2274). Callers may request confidentiality.

A $5,000 reward is being offered by the Humane Society of the United States and the Humane Society Wildlife Land Trust for information leading to an arrest and conviction of the responsible party. The Waterford-based Global Conservation group also pledged $5,000. In addition, the We Energies Foundation is contributing $2,500 to the WRC for Madame X’s continued care and recovery.

Peregrine falcons are listed as an endangered species in Wisconsin. They also are protected under the Federal Migratory Bird Act. Shooting a peregrine falcon is a serious crime, punishable by jail time and fines. The Wisconsin Department of Natural Resources is the lead investigative agency in this case.

We have been involved in Wisconsin’s peregrine falcon recovery effort since the early 1990s. We sponsored the release of captive-produced peregrines and then installed nest boxes at six power plant sites. To date, nearly 200 peregrines have been produced at our facilities. Last year, peregrines nesting at our power plants accounted for 20 percent of Wisconsin’s total state production.

Nearly 200 peregrine falcons have 
been produced at our facilities since 
the early 1990s. 
The loss of Madame X from our Milwaukee County site is especially sad because she was the first falcon to successfully nest at that site. Last spring, she produced three young – Abigail, Vita and Stella. This was the first successful nest at Milwaukee County Power Plant since the plant’s nest box was installed in 2007. A successful nest for the 2014 nesting season at the site now is in jeopardy.

We also are sad to report that Swede, the adult male from our Valley Power Plant, was found dead recently. The bird suffered severe head trauma, although it’s unclear exactly what happened. Swede was 15 years old and had been a mainstay at Valley Power Plant for several nesting seasons. With Swede gone, a successful nest also is in jeopardy at this site.

We remain optimistic that new falcons will move into our Milwaukee County and Valley Power Plant sites as the nesting season is just getting underway. Once again, the public will be able to follow the activity via our live webcams, which will be available soon at

We also remain optimistic that Madame X will continue to recover. We’re hoping she’ll eventually move to a new home at a nature center, where she can help in educational efforts. She can still live a long and healthy life, helping educate others about the importance of saving this endangered species.

CBS-58 News report

We Energies peregrine falcon website

Tuesday, March 4, 2014

Reminder: Energy assistance still available

Customers who are struggling to keep up with their winter heating bills may qualify for assistance in Wisconsin or Michigan.


The Wisconsin Home Energy Assistance Program (WHEAP) provides assistance to more than 200,000 Wisconsin families annually. The benefit amount is determined by household size, income level, energy costs and other factors. An individual with an annual income of approximately $24,700 or less may qualify. Families of four that earn up to approximately $47,500 also may qualify for assistance.

Higher heating bills due to the harsh winter could lead to a higher demand for energy assistance. Those who may qualify for WHEAP assistance should apply early to receive funding while it’s still available.

Wisconsin residents are encouraged to call 866-HEATWIS (432-8947) or visit the website for more information:

Wisconsin Home Energy Assistance Program


The Michigan Low Income Home Energy Assistance Program assists low-income households, particularly those with the lowest incomes, that pay a high proportion of household income for home energy, primarily in meeting their immediate home energy needs.

Michigan customers can contact the Michigan Department of Human Services (DHS) at 517-636-4486 to obtain information about energy assistance and social service agencies.

Information and an online application also are available on the DHS website, which includes sections for Heat and Utility assistance as well as Energy and Weatherization assistance:

Michigan DHS Home Services

Other ways to manage energy bills

Those who do not qualify for WHEAP or the Michigan LIHEAP have some other options available to help manage their bills:
  • Setting up a payment plan. You may qualify for a flexible payment plan to help you catch up on your bills. Payment plan information 
  • Switching to budget bill. You can even out your payments and avoid spikes that can occur during cold winters and hot summers. You pay the same each month, with semi-annual adjustments for actual usage. Budget bill information 
  • Saving energy. You can use energy more wisely going forward to keep more money available to pay bills and meet other needs. Energy-saving ideas