Natural Gas Prices -- September 2008

Natural gas market prices generally are driven by supply and demand. They have been moving higher since 2003, with most of the increase due to rising demand - particularly for electric power generation - that has strained the ability of producers to keep pace. However, the steep increases seen this summer do not appear to be related to market imbalances. Rather, according to many analysts, they are a result of the flow of investment dollars into commodity markets, which has driven up prices. Although prices have fallen in recent weeks, stored gas purchased during the summer months was bought prior to this decline and the cost of that gas will be reflected in heating bills this winter.

By law, gas distribution companies, like Columbia Gas of Kentucky, are not allowed to earn a profit on their gas costs. Columbia Gas of Kentucky's quarterly Gas Cost Adjustments are reviewed by the Kentucky Public Service Commission to make sure they accurately reflect market prices.

At times when natural gas market prices are at high levels, it is especially important to consider participating in the Budget Payment Plan and to take steps to make sure your home is using energy as efficiently as possible. Although the "budget year" begins in August, you can join the Budget Payment Plan at any time of year by calling 800-432-9345 or by visiting the Manage Your Home Account section of this web site.

The prices shown below are expected to remain in effect until Columbia Gas of Kentucky's next scheduled gas cost adjustment in December 2008:

If you are now supplied by Columbia Gas of Kentucky and were supplied by Columbia during the previous 12 months, the current gas supply cost is $14.2263 per Mcf.

If you are now supplied by Columbia Gas of Kentucky and were a participant in the Customer Choice Program during the previous 12 months, your current gas supply cost from Columbia Gas of Kentucky will be $13.3599 per Mcf. This price is applicable for those billing month(s) this year during which you were enrolled with a Choice supplier in the same billing month(s) the previous year. Your gas supply cost will then change to $14.2263 per Mcf (or the price in effect at that time) for those billing months this year during which your gas was supplied by Columbia Gas of Kentucky in the same billing months the previous year.

If you are now a Customer Choice Program participant and were supplied by Columbia Gas of Kentucky during the previous 12 months, your bill will show an adjustment (currently a charge) during the current billing month(s) that is the same billing month(s) as that one year ago when you were supplied by Columbia Gas of Kentucky.

Although Columbia Gas of Kentucky does not mark-up the price of natural gas to consumers, we are concerned about the impact of higher natural gas prices on our customers. Many factors, including weather and household usage patterns, impact winter heating bills and there are some steps you can take now to prepare for winter. In addition to steps you can take to prepare your home for the heating season, there are several payment options and assistance programs that may help you manage your winter heating costs.