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HELENA - While Montanans strain to pay $4 a gallon for gasoline, there's another type of gas whose price is becoming shockingly high - and the worst may be yet to come.

Natural gas, used to heat more than 250,000 Montana homes, is hitting historic highs this summer, when demand is low and prices are supposed to be the same.

Members of Montana's Public Service Commission, which regulates utilities, say they're worried the price will climb higher this winter, translating into huge home-heating bills for many households.

"We think we're approaching a crisis," says Commissioner Bob Raney, D-Livingston. "We know that the cost of gas this coming winter is going to be significantly higher than it was last winter, all across the country.

"We have to pay for it, or figure out how to use less."

This month, residential customers of NorthWestern Energy, the state's largest natural gas utility, are paying $14.91 per dekatherm for natural gas. That's well above last summer's price of $9 to $10, and about as high as prices have been in the past decade.

During winter months, a household with natural-gas heat may use 15 to 20 dekatherms. At current prices, that means a $300 monthly bill - and that's just for natural gas, not including electricity.

Montana-Dakota Utilities, which serves customers in Billings and eastern Montana, is charging $11.75 per dekatherm this month, but will adjust rates upward next month by about $1.50.

NorthWestern's rates, meanwhile, are scheduled to drop slightly in coming months, about 80 cents a dekatherm.

The major natural-gas utilities in Montana adjust their prices monthly, based on the unregulated cost of natural gas they must buy on the market from producers. Only the company's cost of transporting the gas to customers is fully regulated, and that portion is becoming a smaller and smaller part of the overall bill.

Claudia Rapkoch, spokeswoman for NorthWestern Energy, says natural gas prices are controlled by the international market, which has been pushing upward along with oil.

There is increased demand for natural gas to generate electricity, and natural gas can be liquefied and shipped overseas to international markets, she says. All utilities are paying the price, while hoping that the market breaks, she adds.

PSC Chairman Greg Jergeson, D-Chinook, says he's concerned that $15 per dekatherm may look low by winter, because natural gas prices often follow oil prices and the former hasn't yet caught up with the run-up in oil prices.

To attempt to help consumers, the Public Service Commission is sounding the alarm, warning homeowners and businesses to do all they can now to insulate their homes and offices, or to take steps to conserve.

The PSC will attempt to become a clearinghouse for consumers, to inform them about opportunities to help invoke conservation measures and otherwise lower consumption, Jergeson says.

PSC members also say Congress must be prepared to increase home-heating assistance programs for the poor.

"If these energy prices sustain the way they say they're going to, we have to figure out some way to take care of people who are on Social Security and fixed incomes," says Commissioner Ken Toole, D-Helena.

Congress should consider extracting revenue from the huge profits of oil and gas companies, and use some of that revenue to help those who won't be able to afford heating bills in the winter, he says.

NorthWestern is encouraging people to go to "budget billing," to avoid the shock of high prices in the winter, and will be pushing conservation measures as well, Rapkoch says.

"Now is the best time to see if you can take steps to do that, rather than in January," she says.

As regulators, the PSC can monitor gas-purchasing practices by the utilities and penalize them for "imprudent" decisions. But savings by arranging good contracts probably won't be much now, when the price for the commodity is so high, commissioners and others say.

"That's really just nibbling around the edge of the problem, and the problem is the national markets, and Montana is too small to affect those," says Bob Nelson, the Montana Consumer Counsel.

Natural gas prices have been deregulated on the national level for two decades, and the Montana Legislature passed a gas deregulation bill in 1997.

Jergeson and Toole say it would be good if Congress stepped in to re-regulate prices, but that it's not going to happen any time soon.

"The political mantra of the day since the 1990s has been 'deregulation,' " Toole says. "Anyone who says (we should re-regulate) is kind of laughed out of the room. I absolutely think these markets need to be regulated."

Jergeson also notes that some believe the state and nation can tackle the crisis by increasing oil and natural gas exploration. Yet even if more drilling and production occurs, it's not going to help prices this winter, he says.

"I can sit here and fume about deregulation, or they can fume about being unable to drill (in certain areas)," he says. "But the price of natural gas is going to be what the price of natural gas is going to be this winter, and at this point, it looks like it's going to be intolerably high."

Coming Monday

Why is NorthWestern Energy paying such hefty dividends to its shareholders, while asking customers to pay higher rates?

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