New Year Outlook: Natural Gas Prices More Reflective of Winter Costs

SAN FRANCISCO - Last January, in the midst of an energy crisis, alleged market manipulation, and low supplies-coupled with cold weather nationwide-the price of natural gas in California rose to historic levels.

While costs spiked last year, it is important to note that Pacific Gas and Electric Company passes the commodity cost it incurs directly to its customers without marking up the price. Conversely, lower prices are also passed directly on to its customers.

In response to the high costs last year, the Federal Energy Regulatory Commission is considering allegations by the California Public Utilities Commission and other parties that El Paso Natural Gas companies withheld capacity thereby driving up natural gas prices.

In January 2001, the cost of natural gas hit an all time high during of $1.41 per therm. Comparatively, prices for January 2002 are $0.39 per therm. This drop represents a 60 percent decrease in commodity prices.

For customers of Pacific Gas and Electric Company, the average residential bill will be $48.38 for natural gas this January, compared to January 2001 when the average bill rose to $121.92.

For the first time in many months, prices are beginning to stabilize and are more reflective of natural gas costs during the past five years. However, as the winter heating season is underway, natural gas use increases. The average residential customer uses 70 therms of natural gas per month during the winter compared to less than 30 therms during the summer.

The following chart reflects monthly costs for the past five years:

Although natural gas prices are beginning to stabilize, the California Public Utilities Commission's imposed rate surcharge for electricity remains in effect; therefore, Pacific Gas and Electric Company reminds its customers that there are programs to help manage energy bills.

CARE (California Alternative Rates for Energy) provides a 20 percent discount on both gas and electricity for eligible customers. Medical baseline provides qualified customers with a higher allocation of both electricity and natural gas at the lowest rate. Qualified customers of CARE and medical baseline are also exempt from the state's surcharge on electric rates. Another program to help manage customers' bills is the balanced payment program - monthly payments are divided over a 12-month period. For more information on billing options call our toll free number at 1-800-PGE-5000 or visit our website at www.pge.com.

Additionally, all residential customers received a higher allocation of natural gas when winter baseline took effect November 1, 2001. Climate zones, geographical territories and historical consumption determine baseline usage.

While customers will receive a higher gas allotment, conservation remains key. Tips for conserving this winter include:

• Setting thermostat at 68 degrees or cooler

• Maintaining Furnace (change filters, clean air ducts, check for leaks)

• Installing water heater blanket (unless heater is lined inside)

Call 1-800-PGE-5000: For more information on billing options