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PG Energy Reduces Natural Gas Cost

Utility adjusts cost amid warm weather and less demand

Wilkes-Barre, PA (February 9, 2006) –  PG Energy announced today that the company has received approval of a petition which it filed this past Monday with the Pennsylvania Public Utility Commission to decrease its current gas cost by almost eight percent, effective February 10, 2006. The $.94 per mcf (thousand cubic feet) cost reduction brings the price of gas to $11.19 per mcf, representing an eight percent decrease from its current cost of $12.13 per mcf. The reduction keeps PG Energy’s gas cost among the lowest in the state.

For the average residential customer using 124 mcf per year, the reduction will provide an estimated monthly savings of $10 under current rates. Actual PG Energy bills, however, will vary based on individual usage and remaining weather conditions.

The average commercial customer using 413 mcf per year will save an estimated $32 monthly, while the average industrial customer using 19,620 mcf per year will save close to $1,537 monthly.

“Due to mild winter weather and decreased demand for heating fuels, PG Energy has been able to pursue a reduction in gas cost for our customers,” says Bruce Davis, vice president of gas supply and marketing. “While the cost of gas is contingent on a number of factors, including weather, PG Energy is pleased to pass along these savings to our customers, and at a time when many household budgets have been impacted by high energy costs.”

The company explains that last year’s costly energy prices were impacted even further due to natural gas production interruptions caused by hurricanes Katrina and Rita. While the unseasonably warm weather has since tempered those prices, the company cautions customers that the trend of higher energy prices and unsettling conditions in the wholesale commodities market persists throughout the United States.

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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. But because of recent weather and market conditions, PG Energy completed an emergency filing for a reduction in its gas cost with the Pennsylvania PUC, resulting in the lowered price.

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 purchases natural gas at wholesale market prices and resells it to customers without markup or profit. The gas cost for the average residential heating customer represents approximately 77percent of a customer’s overall natural gas bill. 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.

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