While this does not directly affect costs for residential and small commercial customers of those Michigan utilities whose rates are frozen, it will affect rates of some smaller Michigan gas utilities and large users that purchase their own gas on the spot market. Michigan typically cycles more gas in and out of storage than any other state, and 66 percent of the gas consumed in Michigan on a peak winter's day is delivered from Michigan storage inventories. However, natural gas inventories for Michigan industrial and commercial transportation customers this fall will likely be lower than last year's levels, and this will put pressure on the interstate pipeline systems to deliver a larger share of Michigan's needs, especially if the winter is colder than normal. For customers with frozen rates, the most significant impact would be from very cold weather driving up usage and monthly bills. Natural gas prices, in part, are being driven upward by increased demand from gas-fired electric generating plants across the nation and in Michigan and the hurricane season's threat to gas production in the Gulf of Mexico.
Electric generators are a significant gas user.
For instance, the MCV power plant in Midland accounts for about 10 percent of Michigan's total natural gas use. Nationally, DOE forecasts the residential price for natural gas to peak in the third quarter of this year before declining through the first half of next year before increasing again in the third quarter of 2001. About 94 percent of all of the state's natural gas customers should not see higher bills because the gas costs are frozen for the three largest gas utilities. The requested increases average 45 percent. Michigan natural gas storage inventory levels will likely be lower than last year.