Wisconsin residents can expect a dramatic increase in heating costs this winter in comparison to last year, though prices will not reach the height they achieved two years ago.
According to the Public Service Commission, the average cost of heating a typical single-family home will be approximately $611 this winter, an increase of 26 percent over last year.
Annemarie Newman, the public information officer for the PSC, said the figure comes from looking at what the future's contracts are estimating today and that these prices could change at any time.
\Natural gas at the wellhead is an unregulated commodity; the price is whatever the supply and demand sets in the marketplace,"" Newman said. ""What our analysts do is look at what the future's contracts are trading for right now.""
Newman added that the weather could also play an important factor in determining the total amount of fuel used by households.
""If we have a very cold winter ... people's usage goes up and then with increasing demand, that tends to drive the price up,"" Newman added. ""Conversely, if we have a warm winter, demand is down, usage is down and prices are pushed down.""
Two years ago, in the winter of 2000-'01, prices were much higher. The cost of heating a home was approximately $800 on average, according to Steve Kraus, economist for the PSC.
""Last winter, the average cost was about $475,"" Kraus said. ""So this year, [prices are] in between. The volatility is great. It's really dramatic from year to year.""
In addition to the volatile gas prices, fixed costs covering the pipeline needed to ship the gas, utility office buildings, employees and transportation are also included, Kraus said.
Kraus said that gas prices were deregulated by Congress in the late '70s and that the PSC does not control them.
""We don't control those costs; we follow them but we don't have any ability to change them,"" Kraus said. ""It's that deregulated price that drives the volatility of the marketplace.""
UW-Madison junior Christopher Wilson said paying extra money for heating will affect students because they will have less money for school. He added that there is not much that can be done about the increase.
""If [prices are] going up, they're going up,"" Wilson said. ""I don't know what you could do about it, really.\
