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August 19, 2003
NAPERVILLE, Ill. - It's summer, a time when wholesale prices for natural gas are typically low, but not this year. Nationally, natural gas prices have been near historic summer highs, which even caught the attention of Federal Reserve Chairman Alan Greenspan, who has testified twice before Congress regarding high natural gas costs.
The national issue of higher natural gas costs could affect millions of people in Illinois and across the country. Nicor Gas is taking action to help lessen the impact should extreme market volatility persist, and the company is urging customers to start planning now to manage for the potential of higher home-heating bills this winter.
"Current prices and forecasts for the next several months suggest that winter heating bills could be costly," says Ted Lenart, Nicor's Assistant Vice President Supply Operations. "This is why Nicor Gas is encouraging customers to take time now to start thinking about the different bill payment plans and financial assistance programs that are available to meet their needs. We recognize that summer isn't a time when most people are thinking about their winter heating bills, but planning now and taking steps to conserve energy could help customers in this higher-cost environment."
Nicor Gas offers several programs that can help customers better manage their gas bills. Customer Select®, the Budget Plan and a deferred payment arrangement (DPA) are available to all Nicor Gas customers. And for those who qualify, financial assistance is available through the Low Income Home Energy Assistance Program (LIHEAP) and Nicor Gas' Sharing program.
- Customer Select® allows customers to choose a natural gas supplier other than Nicor Gas. By participating, customers choose their rates and services, which could save them money.
- With the Budget Plan customers' bills are spread over a 12-month period, providing some assurance of knowing what their gas bills will be each month. In summer, Budget Plan payments are higher to help build a credit balance to offset higher winter bills. Every four months, customers' Budget Plan payments are adjusted based on their current account balance and Nicor Gas' estimates of future natural gas prices.
- Deferred Payment Arrangements are for customers who have fallen behind in paying their gas bills. For example, if a customer is behind $100 and cannot make a complete payment, that customer can enroll in a DPA and pay an additional $25 per month, plus interest, for four months ($100).
- LIHEAP assists eligible low-income households in paying for energy services. Administered by the Department of Commerce and Economic Opportunity, LIHEAP provides eligible households a one-time annual grant to be used for energy bills.
- Sharing is administered by the Salvation Army and provides one-time annual grants of $150 to residential customers who are having difficulty paying their gas bill and do not qualify for LIHEAP assistance.
Information regarding high gas costs and energy conservation are available at www.nicorgas.com, and the topics will be the focal points of customer newsletters, special bill inserts and an awareness campaign that will be conducted throughout the late summer, fall and winter. Customers can also stay informed by reading their bills and insert materials each month, as throughout the fall and winter Nicor Gas will continue to provide as much information as possible regarding natural gas costs.
The National Situation
Nicor Gas buys natural gas wholesale and then passes on those costs to customers with no markup. As Lenart explains, in North America, the wholesale price for natural gas goes up and down based on the balance between supply and demand. In the winter, storage and production are factors that dictate national levels for natural gas supply, and weather and the economy affect national levels for natural gas demand. Virtually all natural gas used in the United States is produced in North America. But the challenges of tightening supply have driven prices higher in 2003.
Over the past two decades, natural gas has become a fuel of choice for industrial use due to its low cost and environmentally friendly attributes. Today, natural gas fired plants providing electricity consume close to 20 percent of the natural gas used in the U.S. each year. However, when natural gas prices go up, industrial end users either switch to another fuel source or they cut back production, which can adversely affect the economy.
Weather arguably is the single largest factor with the greatest influence on natural gas prices, however it also is the one variable that is the toughest to predict. For example, should the 2003-2004 winter season bring normal winter temperatures, pricing is more likely to stay at its current levels. However should winter bring colder than normal temperatures, pricing could increase dramatically very quickly-and vice versa if weather is warmer than normal.
"We want our customers to be prepared regardless of what temperatures winter brings," Lenart adds. "Once customers understand the national situation, they can begin to plan for managing this potentially higher expense."
To learn more about natural gas costs, bill payment programs and energy conservation tips, visit the Nicor Gas Web site at www.nicorgas.com or contact Nicor Gas directly at 1 888 Nicor4u.
Nicor Gas is one of the nation's largest gas distribution companies. Owned by Nicor, Inc. (NYSE: GAS) a holding company, Nicor Gas has provided safe, reliable and cost-effective natural gas services for nearly 50 years. The Company serves over two million customers in a service territory that encompasses most of the northern third of Illinois, excluding the city of Chicago. For more information about Nicor, Inc., visit the Web site at www.nicor.com.
Caution Concerning Forward-Looking Statements
This document includes certain forward-looking statements about the earnings expectations of Nicor Inc. and its subsidiaries. Although Nicor believes these statements are based on reasonable assumptions, actual results may vary materially from stated expectations. Actual results may differ materially from those indicated in the company's forward-looking statements due to the direct or indirect effects of the results of legal contingencies (including litigation) and the resolution of those issues, including the effects of an ICC review. Other factors that could cause materially different results include, but are not limited to, weather conditions; natural gas and electricity prices; fair value accounting adjustments; health care costs; insurance costs; borrowing needs; interest rates; credit conditions; economic and market conditions; energy conservation; legislative and regulatory actions, results, or adjustments; additional adjustments related to Nicor's retail energy marketing joint venture; asset sales; significant unplanned capital needs and any future mercury-related charges or credits. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this release. Nicor undertakes no obligation to publicly release any revision to these forward-looking statements to reflect events or circumstances after the date of this release. |
