Stella Ceci, a clerk at Andors furniture shop in North Providence, got a surprise recently when she pulled up the store’s heating bill on the computer.
December 2001: $816. This past December: $1,679.
“It’s a significant cost for us, and they’re talking about increasing the rates,” she said, referring to New England Gas Co.’s recent rate-increase proposal, filed Feb. 14 with the state Public Utilities Commission.
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This winter has dealt a double blow for businesses’ heating costs.
First, the protracted cold snap has kept heating bills high thanks to a surge in consumption of natural gas and heating oil. And energy prices also are hovering near all-time highs, with crude oil prices inflated from the threat of war with Iraq.
The average price of a gallon of home-heating oil in Rhode Island was $1.82 last week – up 50 percent from a year earlier, according to the State Energy Office.
Although down 2 cents from Feb. 10, heating oil is nearly as expensive as it was during early 2000, when low fuel-oil inventories pushed retail prices to record highs.
“This is one of the highest levels we’ve ever had,” said Janice McClanaghan of the State Energy Office.
Meanwhile, natural gas prices also could be on the rise by next week.
New England Gas Co. is asking the PUC to approve an 8 percent increase in the cost of gas, citing “a dramatic increase in energy prices.” The rate hike, which would take effect March 1 if approved, would boost the average residential customer’s bill by $15 in March and $3 in mid-summer.
A gas company press release says “a much colder winter than anticipated,” increased demand and the threat of war are to blame for rising natural-gas costs.
Unlike three years ago, heating-oil supplies do not seem to be the culprit in rising prices. The state had a 7.5-day cushion of heating-oil supplies at Rhode Island terminals as of early last week, according to the Energy Office. Even during last week’s major snowstorm, some barges were able to make their way into the Port of Providence to unload supplies.
“Supply has not been a problem,” McClanaghan said.
Yet several lawmakers – including U.S. Rep. Jim Langevin and U.S. Sen. Jack Reed – have pressed President Bush to release supplies from the Northeast Heating Oil Reserve, citing tight inventories. Of the roughly 1 million barrels of emergency oil stored in the Northeast, 150,000 gallons are stored in Providence, at Motiva Enterprises on Allens Avenue.
A confluence of factors is contributing to ballooning prices. According to the Watertown, Mass.-based New England Fuel Institute, the cold weather, threat of war, Venezuelan oil strike and oil refiners’ maintenance schedules all are driving prices higher.
Many businesses, however, buffer themselves from whips in the price of heating oil by locking into contracts before winter, opting for either a fixed price or price cap. More and more heating-oil dealers are offering price-protection options as an edge over their competition.
Victor Allienello, chairman of the Oil Heat Institute of Rhode Island and owner of East Providence Fuel Oil Co., estimates that more than 30 percent of the state’s 190 or so heat-oil dealers offer some form of price protection. And most businesses jump at the chance – 80 percent of Allienello’s commercial accounts opt for a fixed-price or price-cap plan, compared with just 30 percent of Allienello’s residential customers.
Customers who locked in before this winter “are doing well,” he said.
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