Natural gas prices will be lower this winter and wholesale costs will be one-third lower than a year ago, according to the Kentucky Public Service Commission.

Natural gas prices began rising steadily in 2003. The sharpest increase, which the PSC estimates was about 40 percent, occurred a year ago after hurricanes Katrina and Rita damaged production and processing facilities on the Gulf Coast.

Production was restored to normal levels this past summer.

By federal law, natural gas prices are not regulated at the wholesale level and fluctuate with supply and demand.

Kentucky law allows gas companies to recover the wholesale cost of the gas delivered to customers, but companies cannot earn a profit on their gas costs.

The PSC reviews companies' gas cost adjustments to make sure they accurately reflect the wholesale cost of gas.

Kentucky's five major natural gas distribution companies, including southcentral Kentucky's Atmos Energy, expect their wholesale cost in November to be an average of $8.65 per 1,000 cubic feet (mcf). That is down $4.30 (33 percent), from an average of $12.95 per mcf a year ago, according to the PSC.

In November 2002, before natural gas prices began to rise, the average wholesale cost was $4.90 per mcf.

The wholesale cost of natural gas accounts for about three-fourths of a typical consumer's winter bill.

The PSC estimates that for an average Kentucky customer using 10 mcf per month, the wholesale cost decline means that the total monthly bill next month will be $116.35, down from $158.12 a year ago, a decrease of 26 percent.

“We're cautiously optimistic that this year's prices will be lower,” said Greg Coker, director of public affairs of Atmos Energy in Nashville. “We don't make money off the commodity; we buy the commodity, and pass those costs on to our customers. We make money off the distribution so we want what our customers want, low natural gas prices.”

Coker said Atmos Energy buys its natural gas in the summertime, when prices are lower, which allows the company to pass savings on to customers.

About 44 percent of Kentuckians heat their homes with natural gas.

Although only 10 percent of Kentuckians heat their homes using propane, many in southcentral Kentucky use propane because they live in rural areas. About 3 percent of Kentuckians use fuel oil.

Propane is a 65 percent derivative of natural gas, according to Joan Miller of Miller's Bottled Gas Inc.

Miller said even though indications are that propane prices will be lower for consumers this year, she has yet to hear from suppliers.

“We haven't seen any prices go down appreciably at this point. All the stats that will tell you they will go down are in place,” Miller said. “There's plenty of supply, refinery production is online.”

Although natural gas prices are lower, the PSC estimates there will be Kentuckians who will have difficulty paying their heating bills.

The PSC encourages consumers to take advantage of local heating assistance and weatherization programs by community action agencies.

Making bills easier to swallow

€Budget billing: This option allows customers to pay the same amount each month, based on average monthly usage during the year. Customers should contact their utility for more information.

€Energy conservation measures: Simple steps such as turning down thermostats on furnaces (most people are comfortable at 68 degrees) and water heaters (120 degrees is hot enough for nearly all uses) can be big energy savers.

€Energy audits: Many local utilities offer home energy audits at little or no cost to consumers. These audits can identify energy-wasting trouble spots and provide information on how to correct the problems.

€Weatherization: Consumers can do a number of things to reduce inflows of cold air and leakage of warm air, particularly around windows and doors.

Some basic weatherization steps include:

€Using caulk or weather-stripping to seal cracks around windows, doors, pipes and other points where cold air can enter the home. This alone can reduce heating costs by 10 percent or more.

€Adding insulation in attics, crawl spaces and walls.

€Covering windows, especially those with single-pane glass, with storm windows or plastic sheeting before the onset of cold weather.

€Cleaning or replace furnace filters monthly to improve airflow and efficiency.

- Source: Public Service Commission

Short&Simple

Budget billing: This option allows customers to pay the same amount each month, based on average monthly usage during the year. Customers should contact their utility for more information.

Energy conservation measures: Simple steps such as turning down thermostats on furnaces (most people are comfortable at 68 degrees) and water heaters (120 degrees is hot enough for nearly all uses) can be big energy savers.

Energy audits: Many local utilities offer home energy audits at little or no cost to consumers. These audits can identify energy-wasting trouble spots and provide information on how to correct the problems.

Weatherization: Consumers can do a number of things to reduce inflows of cold air and leakage of warm air, particularly around windows and doors.

Some basic weatherization steps include:

€Using caulk or weather-stripping to seal cracks around windows, doors, pipes and other points where cold air can enter the home. This alone can reduce heating costs by 10 percent or more.

€Adding insulation in attics, crawl spaces and walls.

€Covering windows, especially those with single-pane glass, with storm windows or plastic sheeting before the onset of cold weather.

€Cleaning or replace furnace filters monthly to improve airflow and efficiency.

- Source: Public Service Commission