ENERGY (GENERAL); FUEL PRICES;

ENERGY;

You asked for information on: (1) the steps the state is taking to prepare its energy supply for the heating season, including whether it is storing heating oil, and (2) the financial status of Operation Fuel.

PREPARATION FOR THE HEATING SEASON

The state is monitoring energy markets for potential supply problems or price spikes. Earlier this month, the Department of Public Utility Control held an informational session with gas utilities, gas pipeline companies, and other interested parties on the status of the gas market for the upcoming heating season. The participants all stated that supplies are likely to be adequate for the season and that the amount of gas that has been placed in storage is comparable to previous years. (The gas utilities rely on a combination of gas bought under long term contracts, stored gas, and gas bought on the spot market to meet demand. ) However, the cost of the stored gas is substantially above the comparable cost last season and this cost will be passed on to ratepayers through the purchased gas adjustment on gas bills. The total rate charged to ratepayers will depend on several factors, most notably weather.

The Office of Policy and Management (OPM) will continue to monitor price and supply trends for heating oil and propane. OPM staff will participate in the federal Department of Energy’s winter fuels outlook meeting on October 7. OPM staff believe that the supply situation for heating oil and propane is better than it was last winter.

The state does not have its own heating oil reserve, and it appears that the costs of setting up a state reserve would exceed its likely benefits. However, the federal government has established the Northeast Home Heating Oil Reserve. The reserve has oil in storage in New Haven and New Jersey. It is designed to provide a buffer to ensure that the states will have prompt access to oil supplies in the event of a supply emergency. Congress has established a mechanism for the release of fuel from the reserve. The main trigger for the Northeast Regional Petroleum Reserve will be based on price as it relates to yearly trends and duration of price spike. The difference between the price of home heating oil in the Northeast and crude oil must be more than 60% greater than its 5-year rolling average for that month. The price must continue to exceed this equation for at least 7 consecutive days; and the price differential must be increasing. However, the president may release these reserves at his discretion at any time.

OPERATION FUEL

Operation Fuel is a not-for-profit agency that provides emergency energy assistance to state residents who do not qualify for government assistance. The agency’s budget for the upcoming heating season is projected to be approximately $ 1,010,000, compared to $ 990,000 in 2002-03. The agency has less cash on hand than it historically has had at this date, and as a result will issue its appeal for contributions in mid-October rather than late November. Contributions received from utility customers under the “add-a-dollar” program are a major source of Operation Fuel’s revenues.

Operation Fuel uses a network of 61 fuel banks that are in direct contact with local households in need. They are located in town social service agencies, community action agencies, non-profit organizations such as the Red Cross, Visiting Nurse Association and religious organizations. Further information about Operation Fuel is available on its Website, http: //www. operationfuel. org/index2. htm.

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