(A mountain with snow.)

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Soaring natural gas prices and record stretches of dry weather could mean higher home heating costs for British Columbians and lower revenues for the provincial government.

According to a U.S. government energy survey released Tuesday, futures contracts for natural gas are at the highest price levels since a record runup that peaked in the winter of 2001. A harsh winter in eastern North American and uncertainty over Iraq were blamed for this season's surge.

The B.C. Utilities Commission (BCUC) has already warned consumers to expect an increase in the price of household natural gas, thanks to U.S. market activity, and a B.C. Gas spokesman acknowledged that a price increase could be coming soon.

Meanwhile, record-low snowpacks in watersheds that sustain the province's biggest system of dams and reservoirs are prompting B.C. Hydro to import electricity at a time of year when it's usually flush with water.

Hydro will release snowpack forecasts next week, but confirms some major reservoirs are as much as 18 per cent below normal.

The BCUC forecasts an average natural gas commodity price through 2003 at the Sumas, Washington trade hub of $6.57 Cdn. per gigajoule of gas -- $2.89 per gigajoule more than the January-to-June period of 2002.

A B.C. household consumes 10 gigajoules per month on average, 120 gigajoules per year.

The U.S. price is already higher than the BCUC's projection of $6.57 -- it was $8.46 Cdn on Monday at a major American trading hub -- but is expected to fall back somewhat as winter demand eases.

In December alone, the utilities commission notes, gas prices rose $1 per gigajoule -- and if that amount were passed directly onto consumers it would push a household gas bill up $10 a month, or $120 a year.

"Temperature, precipitation levels, the strength of the economic recover, and the effect of drilling levels on supply will be major influences on gas prices over the next year," the commission says in a recent outlook report.

"If current gas prices continue, a rate increase to pass through higher gas commodity costs is likely to be necessary in spring 2001."

B.C. Gas isn't predicting how much prices could rise but says if the higher trend continues it will ask for an increase when it meets with the commission in March -- at a regularly scheduled quarterly price meeting with BCUC regulators.

The schedule of quarterly meetings was established after the 2000-2001 price runup which saw the gas utility handcuffed by regulation and unable to keep up with rocketing prices in a runway gas market.

Sumas prices hit $10.07 Cdn and during that period and B.C. residential customers' gas bills doubled from about $700 a year to $1,4000 -- before falling back to about $1,100 a year.

Coincidentally, BC Gas is awaiting a decision on an application to the BCUC for a modest increase on its gas delivery service charges -- which are separate from charges for the price of the gas itself.

BC Gas is asking for an average 1.7 per cent increase in the price of delivery service, which will raise a household gas bill by $1.55 per month.

BC Gas spokesman Dean Pelkey said a cold winter on the East Coast and uncertainty about the conflict in Iraq have pushed up the price of gas.

He said the utility is currently doing its own forecast for gas prices over the next 12 months.

"If things continue the way they are going, there's a good chance we could have to ask for a rate increase on the commodities side in the next couple of months," Pelkey said.

"It's hard to tell [how much] at this point. There has been a trend upward probably since September or October of last year. This trend shows no signs of abating."

He said that to this point in time, BC Gas customers have been insulated from the rising prices.

"We're able to buy and store a fair amount of gas. We were able to buy at lower summer prices almost 60 per cent of our supply for the winter and put that into storage and hedging mechanisms.

"But looking ahead, prices seem to be trending upwards."

Meanwhile, the dearth of snow across the province is so severe that it is forcing cancellation of skiing and snowboarding events at the Northern B.C. Winter Games this weekend in Fraser Lake, Fort St. James and Vanderhoof.

B.C. Hydro will make a formal announcement later this month on its reservoir levels but acknowledged Wednesday that it's already feeling the crunch of unseasonably dry weather.

"If you wanted something preliminary, the water supply forecast is for well below average inflows for most of the province with some near-average forecasts for Vancouver Island, Howe Sound and Bridge River," said Hydro spokeswoman Elisha Odowichuk.

"But it's still early and that's what we want to stress.

"A lot of people believe that February and March could be a time when we recover."

Hydro's biggest generation systems are located on the Peace River and Columbia River drainages.

According to measurements dated from the beginning of January, in the Peace, Williston Basin is 89 per cent of normal, Mica 82 per cent.

For the Columbia, Revelstoke is 83 per cent.

That compares with a dry spell two years ago when 88 per cent was considered low in major reservoirs.

Snow survey measurements from the Ministry of Sustainable Resource Management show the snowpack in most areas of the upper and lower Columbia system to be significantly below normal -- and at record lows in some cases. For example at the Downie Slide, the snowpack has an equivalent water depth of 166 millimetres -- the lowest in 17 years of record keeping, and half the normal level of 320mm.

In the Peace drainage, the measurement at Fort St. John was 18 mm, compared to a norm of 57 mm. But Odowichuk noted that the situation could turn around quickly with a burst of rain.

Meanwhile, a spokesman for Teck Cominco dismissed reports that the mining giant would consider shutting down operations at its zinc smelter in Trail and instead sell electricity onto the U.S. market in 2003.

Teck realized profits of about $130 million from that tactic in 2001 when it could fetch prices reaching $174 a megawatt hour -- but the average price fell to $23 in 2002.

Much of the higher price in 2001 was driven by price-fixing by U.S. energy traders who are now the subject of a federal investigation.