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Atmos Energy Advises Customers to Expect Higher Winter Gas Bills; Utility Concerned About the Effect of Higher Gas Costs On Customers

Posted on: Wednesday, 5 October 2005, 12:02 CDT

Atmos Energy Corporation (NYSE:ATO) said today that natural gas utility bills for an average North Central Texas residential customer could be approximately 60 to 90 percent higher than gas bills last winter because of the effects of two disastrous hurricanes in the Gulf of Mexico, the already-high demand for natural gas and tight supplies of domestic natural gas production.

"Reliable natural gas service for our customers is our top priority, and we expect natural gas supplies will be adequate again this winter to meet our customers' needs," said Dick Erskine, president of Atmos Energy's Mid-Tex Division. "Gas prices, though, will be much higher than last winter, and we are quite concerned about their effect on our customers."

Erskine noted that Hurricanes Katrina and Rita disrupted about 15 percent of the country's natural gas production, which was already tight because of growing demands from power plants and other users. Cooler weather also could increase the bills customers will pay to heat their homes this winter, because the past two winters have been warmer than normal.

Assuming a normal winter, the average Atmos Energy residential customer in North Central Texas could expect to pay approximately $690.00 during the winter heating months of October 2005 through March 2006. This estimate compares with an average cost during the last heating season of $367.00.

An average bill provides a basis for comparison, but most customers will pay more or less, depending on their usage, regional weather patterns and gas commodity market conditions.

Company officials said the estimate is based upon current market indicators for wholesale natural gas prices and the amount of natural gas that the company has injected into storage.

During winter months, 75 to 80 percent of a customer's total bill pays for just the gas alone.

"Customers pay only what Atmos Energy pays for natural gas -- and not a penny more," added Erskine. "We buy the gas on behalf of customers. We simply pass the cost of the gas on to our customers with no markup."

A gas utility earns its income from fees for delivering gas to customers and for maintaining its utility distribution system, Erskine said. Atmos Energy's rates charged for delivering gas to customers are regulated by the Railroad Commission of Texas.

"Volatility of gas prices in recent months," Erskine said, "has been like a giant roller coaster. We have never seen gas prices change so fast, making it harder to predict our winter bills."

To ensure reliable service and to stabilize the price that its customers pay for natural gas, Atmos Energy buys natural gas during the summer months and stores it underground for use during the winter.

"We're fully on the side of our customers in this matter, because high gas prices hurt their family budgets and increase our operating expenses," he said. "We are doing everything possible to buy gas supplies or to contract for future supplies at as low a cost as possible without sacrificing reliability."

Consumers can help manage their energy bills, too, by taking the following steps: 1. Enroll in budget billing. Customers can even out their natural gas utility bills over a 12-month period by signing up for Atmos Energy's Budget Billing Program. Call toll-free 1-800-460-3030 for details or enroll on the company's Web site at https://www.atmosenergy.com/cs/ecustomer/lbb_signup.html. 2. Use energy more efficiently. One of the best ways consumers can control their energy use -- and the amount of their monthly natural gas bills -- is to use energy wisely. Insulating doors and windows, purchasing energy-efficient appliances and installing automatic set-back thermostats are among the measures consumers can take. For additional ideas, see the company's Web site at www.atmosenergy.com. 3. Apply now for energy assistance if you qualify. Atmos Energy collects donations from its customers to provide energy assistance to customers needing help. These funds are distributed through local community energy assistance programs. Some low-income and fixed-income customers may qualify through the Low Income Home Energy Assistance Program, or LIHEAP. To learn more, call the local community energy assistance agency for details. The names of the participating community assistance programs are available on our Web site https://www.atmosenergy.com/cs/faq/eaa.html or by calling Atmos Energy's Customer Support Center at 1-800-460-3030.

Natural gas is a secure domestic energy resource, with almost all (84 percent) of the natural gas consumed in the United States produced in this country. Most of the remaining supply (13 percent) comes from Canada, with a small amount (3 percent) imported by tanker ships in a condensed form known as liquefied natural gas, or LNG.

"The challenge of satisfying the growing demand for natural gas is a national problem that calls for a national solution," Erskine said. "The Energy Act of 2005, which became law this past summer, is a positive step designed to increase natural gas supplies, expand pipelines to transport more gas supplies to consumers, promote energy efficiency and provide more assistance to Americans hardest hit by rising energy costs.

"It will take time for these energy policies to yield more natural gas supplies," Erskine said.

"What consumers need now is for Congress to permit exploration for gas from untapped new areas, such as the Outer Continental Shelf, offshore Florida and California, and federal lands in the West. Large discoveries of gas in these areas could lower gas prices," he said.

Wholesale natural gas prices have risen in recent years because the demand for natural gas has grown rapidly due to its cleanliness and efficiency. However, outdated concerns about the environmental effects of finding and producing natural gas have made it increasingly difficult to bring major new natural gas supplies to market, according to the American Gas Association. Technological improvements have made finding and producing natural gas more environmentally sensitive and safer than ever, AGA said.

Atmos Energy Corporation, headquartered in Dallas, is the country's largest natural-gas-only distributor, serving about 3.2 million gas utility customers. Atmos Energy's utility operations serve more than 1,500 communities in 12 states from the Blue Ridge Mountains in the East to the Rocky Mountains in the West. Atmos Energy's nonutility operations, organized under Atmos Energy Holdings, Inc., operate in 22 states. They provide natural gas marketing and procurement services to industrial, commercial and municipal customers and manage company-owned natural gas pipeline and storage assets, including one of the largest intrastate natural gas pipelines in Texas. For more information, visit www.atmosenergy.com.

The Mid-Tex Division of Atmos Energy Corporation, based in Dallas, Texas, serves approximately 1.4 million natural gas utility customers in north and central Texas.

Note to editors: The Energy Information Administration of the Department of Energy has announced that it will issue its long-range estimate of winter heating costs on October 12.

The American Gas Association's Web site offers a detailed backgrounder about the winter gas supply situation at http://www.aga.org/Template.cfm?Section=Overview_and_FAQs&template=/ ContentManagement/ContentDisplay.cfm&ContentID=17581.

AGA also has an informative statistical overview of the natural gas industry at http://www.aga.org/Template.cfm?Section=Industry_Facts_and_Stats1& template=/ContentManagement/ContentDisplay.cfm&ContentID=17654.

(Due to their length, these URLs may need to be copied/pasted into your Internet browser's address field. Remove the extra space if one exists.)

Source: Business Wire

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