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Higher Rates Strain the Budgets of All Types of Energy Users as Cold Weather Arrives by Gail Kinsey Hill The Oregonian, November 19, 2000

George Lowe, general manager of SP Newsprint's Newberg paper mill, scowled at his audience.

"I never thought anyone could sink below the railroad in my esteem," he growled at the gathering of utility executives. "But you have."

Nervous laughter rippled through the conference room filled with utility executives. They knew spiking electricity costs had bloodied his business. But they couldn't do much to ease the pain of energy-intensive businesses such as SP Newsprint.

So, they smiled meekly and let the barbs fly.

The steady pounding of high energy prices already has taken its toll on large industrial customers. Now, businesses and households are beginning to feel the hit, a sharp slap of awareness just as winter starts to set in.

Last week, the season's first cold snap put an exclamation mark on the increasingly frosty relationship between utilities and their customers.

A broad range of small businesses, from restaurants to grocery stores to bakeries, are bracing themselves for a long, expensive winter. The sudden jump also will hurt residential consumers, especially low-income individuals already struggling to balance monthly expenses.

Energy experts and utility executives blame a complex mix of market forces for the unusually high and sustained energy prices. They predict lower prices in a year or two, when more electricity generation and natural gas resources become available.

They also try to calm customers by explaining that electricity and heating oil prices, when adjusted for inflation, are less than they were in the 1980s, though higher than much of the 1970s. Natural gas, adjusted for inflation, is cheaper now for residential and commercial customers than in either the 1970s or '80s, even after sharp increases that took effect Oct. 1.

The 1990s were exceptionally kind to energy consumers, utility officials emphasize. Now, prices are more in synch with historical levels.

But those explanations aren't likely to quiet Lowe's ire or the anxiety of other large energy-intensive industries, such as aluminum and steel.

"Obviously, it's drastically reduced our profits," Lowe said. Electricity costs, now 20 percent higher than a year ago, account for almost one-quarter of the mill's operating expenses, he said.

Lowe is not alone with his problems. Individuals and businesses throughout Oregon are looking for ways to cut their energy costs.

"Single-parent households, they're the ones who are really concerned," said Jay Formick, executive director of Oregon Home Energy Assistance Team, or Oregon HEAT, a nonprofit organization that helps the poor pay their heating bills. "Understandably so. They're on a very thin margin."

With an annual budget of about $800,000, Oregon HEAT helps about 5,000 families pay their heating bills. This winter, Formick expects that requests for assistance will significantly outstrip the organization's capabilities.

Kris Shelton, a small-engine mechanic who lives in Grants Pass with his 13-year-old son, recently turned off all but one of his electric baseboard heaters because he knew he couldn't afford winter utility bills he knew would far exceed $100 a month.

He plans to heat his two-story rental with a small electric oil heater and a strategically positioned fan. Shelton hopes that will save about $40 a month.

"Every penny counts," he says.

Despite these energy-saving measures, he knows cold nights await.

"We put on long-sleeve shirts, we pile on the blankets ... we deal with it," he said. "If it gets too cold, we can go to Grandma's and huddle around the fireplace."

He's on Oregon HEAT's waiting list.

Monthly utility bills for households and businesses vary widely, depending on weather conditions and the type of energy consumed. About 46 percent of Oregon households rely on electricity for their primary source of heat, according to a 1999 survey by the Oregon Department of Energy. About 32 percent rely on natural gas. Another 9 percent use oil heat, and the remainder use wood or something else.

Pat McCarthy, a retiree who lives in a Southeast Portland condo, is thinking about converting from electric baseboard heat to natural gas but hasn't yet made the leap. Over the years, he has added insulation and installed new windows, all with a mind to cutting costs.

"I've been gradually chipping away," he said.

Earlier this month, a technician from Portland General Electric checked out his home and recommended that McCarthy add insulation in the attic and replace his water heater with a newer, more energy efficient model.

McCarthy also is trying to figure out what to do with a large sliding glass door that opens onto a deck. "You lose humongous amounts of heat through that," he said.

Still, McCarthy isn't complaining about the rate increases that could start showing up on his January bill.

"There's nothing I can do about it," he said. "I can yell and scream and moan and groan, but that's not going to change anything."