By Mike Boyer
The Cincinnati Enquirer
and Anna Guido
Enquirer contributor

It isn't just homeowners who heat with natural gas feeling the sting of higher utility bills this winter.

Businesses that rely on the fuel for the goods and services they sell are also forced to cope with higher utility bills - and the prospect of passing those costs on to customers.

Middletown's AK Steel is the area's biggest industrial user of natural gas, consuming about 40 billion cubic feet annually.

Along with sharply higher prices for key steel ingredients such as scrap metal and coke, higher natural gas costs this winter prompted AK Steel to implement surcharges to cover those costs in January.

The company announced a $30-a-ton surcharge on carbon steel like that produced at its Middletown mill because of "extraordinary increases in raw material costs.'' And this month it announced a $90-a-ton surcharge for electrical sheet and strip products.

Before 2000, AK Steel, which buys its natural gas wholesale, paid about $2.50 per thousand cubic feet of gas, said spokesman Alan McCoy. Since then, he said, wholesale prices have doubled to about $5 per thousand cubic feet and at times, particularly in winter, have spiked much higher.

Every dollar increase for a thousand cubic feet of gas costs AK Steel about $40 million, CEO James Wainscott told investors last month.

Although AK Steel tries to lock in lower gas prices by buying some gas months in advance, a practice known as hedging, McCoy said there's a risk in buying too much ahead of the market.

"If the price drops, you could be paying too much,'' he said.

Gas costs aren't the only raw material fueling AK's surcharges, McCoy said; recently, scrap metal prices also have doubled to $300 a ton.

Royster-Clark Inc. in North Bend, a manufacturer of liquid fertilizer, pesticides and other agricultural products, uses natural gas to heat boilers to make its products.

"The gas prices are killing us," said plant manager Bill Chokran. He declined to provide numbers.

The privately owned company, in business in Cincinnati since 1964, does most of its business in the Tristate but also has clients in Illinois, Chokran said.

He thinks the natural gas price increases will have to be passed on to customers.

"We can't stay in business if it costs more to make it than what we sell it for," he said. "This is the worst I've seen. It hasn't been this high ever."

Some businesses have found ways to cope with the increases.

Widmer's dry cleaners, which operates 16 stores in Cincinnati, uses about 1.5 million cubic feet of gas a month to generate steam for the boiler at its O'Bryonville plant.

For the last several years, Widmer's has been able to lock in its gas costs with an annual purchase agreement with an independent supplier, said Chris Von Nida, controller.

Widmer's paid about 69 cents per hundred cubic feet in January, up from about 59 cents a year ago. But Von Nida figures that's still about 17 cents per hundred cubic feet less than if the company bought gas through Cinergy Corp.

"There's not much we can do. We need steam to clean clothes,'' he said. But by locking in its gas cost in October for the winter, he said, the company has been able to avoid raising prices.

The rising cost of natural gas also has been hard on Funke's Greenhouses Inc. in Winton Place since 2000, when gas prices jumped, owner Al Funke said.

"That December, I paid $22,000 just for gas - not electric," Funke said. "I lost my shirt on poinsettias that year. We only sold $18,000 worth."

Funke's, at 4798 Gray Road, has 80,000 square feet of greenhouses and nearly 4 acres in exterior production areas.

Funke said the cost of natural gas "makes it very difficult to manage capital."

"Last year, I paid Cinergy $2,600 a month on even billing just for gas. At the end of the year I had a shortfall in excess of $13,000 and had to pay Cinergy the balance.''

With this winter's increases, Funke said his monthly gas bill has doubled to $4,600.

E-mail mboyer@enquirer.com