Expected to Have Little Impact on Consumers’ Bills : Natural Gas Price Ceilings Lifted

After 30 years of strict federal control, price ceilings are being lifted today on about half of the nation’s natural gas, but surplus supplies and falling oil prices are expected to keep consumers’ bills stable.

Most consumers won’t even notice the change when they get their January bills this month.

For one thing, federal rules governing the pipeline companies that move gas from producer to consumer forbid rate adjustments based on anticipated changes in the price of decontrolled gas.

Because rates can be adjusted only after a price change by producers, any increase or decrease will not show up until next spring or summer when the pipelines file their “purchased gas adjustments” with the Federal Energy Regulatory Administration.

Rated a Good Buy

But even then, hardly anyone involved in the $65-billion-a-year industry that provides one-fourth of the nation’s energy expects any significant price change. That will be a relief for consumers, who have seen annual double-digit increases in their gas rates for three of the last five years.

Standard & Poor’s Corp. says natural gas will be one of the best buys of 1985, with its price rising less than the 4% increase in overall consumer prices that the business information company is predicting for the new year.

The government’s Energy Information Administration predicts that residential natural gas prices, which on a nationwide basis actually fell about 1% last year, will rise only 1 cent per 1,000 cubic feet--from the current $6.08 average to $6.09--if oil prices remain stable in 1985.

But if oil prices fall to $25 a barrel, as Energy Secretary Donald P. Hodel and many private analysts believe they will, residential gas rates could drop another 2% to an average of $5.93.

“If oil prices continue to go down, that’s going to put a big damper on natural gas prices,” said Ed Rothschild of the Citizen-Labor Energy Coalition, a group that just a year ago was predicting a 14% jump in residential rates upon decontrol.

Based on the purchased gas adjustments that its member pipeline companies have filed with the FERC, the Interstate Natural Gas Assn. of America said consumer prices should rise about 1.2% this winter following last year’s drop, the first in 18 years.

Surveys by the American Gas Assn., an organization of pipeline and local distribution companies, produce roughly the same figures.

“When you consider inflation, the real price has come down this winter,” said AGA President George Lawrence. “We see that flatness continuing, not only this winter but until 1990.”

But Jerome McGrath, Lawrence’s counterpart at the Interstate Natural Gas Assn., warned that producers still could raise their prices an average 9% to 12% in 1985 under indefinite price escalator clauses in their long-term contracts with pipeline companies.

Those contracts were signed in the late 1970s following severe shortages of gas that forced the closures of schools and industrial plants in the Midwest and led to the decision by Congress in 1978 to remove federal price ceilings on all the new gas drilled since then, effective todaycq.

“The basic story from many pipelines is that they have yet to make significant progress in renegotiating the indefinite price escalator problem,” McGrath said. “We are, nonetheless, hopeful that producers will renegotiate.”

Affects Only 14%

The American Petroleum Institute, whose membership includes many gas producers, counters that only 14% of total gas supplies are subject to indefinite price escalator increases.

“Both sellers and purchasers have strong incentives to avoid uneconomic pricing of gas,” the institute said in a discussion paper on the issue. “So there is reason to believe the contract renegotiation could resolve any pricing problems.”

Except for the escalator clauses, all of the pressure on gas prices is down, not up.

Lawrence notes that there are now about 2 trillion cubic feet--about 11% of the nation’s annual use--of gas immediately available from U.S. producers above the current demand levels.