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PG Energy Announces Gas Cost Effective December 1

30 Nov 2005

Wholesale Market Conditions and Hurricane Activities Force Increase in Natural Gas Costs

Wilkes-Barre, PA (November 30, 2005) – While natural gas commodity prices have risen significantly, PG Energy has increased its gas cost from $1.207 per ccf (hundred cubic feet) to $1.212 per ccf, effective December 1, 2005. The natural gas utility explains that the slight increase had been unavoidable due to unsettling wholesale market conditions and prices that were further affected by the hurricanes in the Gulf of Mexico. The company adds that the December cost of $1.212 per ccf represents the lowest cost among major natural gas utilities in the state.

“The trend of higher prices and increased volatility in the wholesale commodities market continues throughout the United States,” says Donna Gillis, manager of communications. “Prices that were already high were affected even more by hurricanes Katrina and Rita, as the destruction put a strain on natural gas production and supplies.”

“PG Energy recognizes the impact that today’s natural gas prices may have on its customers and continues to encourage them to seek available payment assistance if needed.”

The company points out that the cost of gas on a customer’s bill is the same price PG Energy has paid for the gas – there is no markup or profit. As of this summer, however, that cost of gas accounts for more than 78 percent of a customer’s bill. With the cost at $1.212 per ccf, it is estimated that the average residential customer bill with 1,200 ccf usage will increase to $155.30 per month from $154.70.

Natural gas service consists of two main components: gas cost and base rate. The gas cost includes the commodity cost and gas cost adjustment charges. PG Energy sets the annual cost of gas on December 1 of each year; that cost is then subject to quarterly adjustments, upward or downward, which reflect actual commodity costs incurred by the company.

The base rate is designed to cover items such as the cost to safely and reliably deliver natural gas to customers, maintenance and improvements of the natural gas distribution system and administrative costs.

PG Energy is committed to helping its customers prepare for and manage their winter heating bills. Although the company purchases natural gas on the open market, it tries to protect its customers from the full impact of price volatility with a diverse portfolio of supply contracts while purchasing its supply requirements throughout the year, particularly during the summer months when prices have been generally more favorable, and store it for use during cold weather.

While the company encourages customers to weatherize their homes and use energy-efficient products – two measures that can greatly reduce home heating bills, PG Energy also offers a number of payment assistance programs. Extensive promotions of those programs have led to a 15 percent increase from last year in PG Energy’s Budget Payment Plan enrollment and a 20 percent increase in CAP (Customer Assistance Program) enrollment. The company also offers its Project Outreach grant program for income-eligible customers and extensively promotes the federally-funded Low-Income Home Energy Assistance Program while assisting customers in the application process. Last year, 15,239 customers received LIHEAP grants. Company tips for energy conservation and efficiency are also available to customers. PG Energy customers are encouraged to visit www.pgenergy.com or call 1-800-432-8017 for more information on assistance programs and energy conservation.

PG Energy, headquartered in Wilkes-Barre, Pennsylvania, is a natural gas operating division of Southern Union Company (NYSE: SUG). PG Energy serves approximately 158,000 customers in 13 counties throughout northeastern and central Pennsylvania, including the cities of Scranton, Wilkes-Barre and Williamsport.