Release Date: September 30, 2005
Contact: PG&E News Department (415) 973-5930

NATURAL GAS WATCH — October Natural Gas Bills up $17.45 From a Year Ago

Summary: The economic impact of Hurricanes Katrina and Rita will be felt on natural gas bills in October, as PG&E’s residential customers can expect to pay $17.45 more for the fuel in October, compared to October of 2004 – an increase of 70.8%. While natural gas costs have been climbing in recent years because of growing demand for the fuel, the hurricanes’ devastation of natural gas facilities in the Gulf of Mexico caused prices to surge nationally.

Analysis: Hurricanes Katrina and Rita hit at the heart of America’s energy infrastructure, causing wide-spread damage to natural gas rigs and facilities. Currently, 72% of the 819 manned natural gas platforms in the Gulf of Mexico are off-line, curtailing 80% of the daily gas production in that region. In the immediate aftermath of the hurricanes, natural gas prices have surged nation-wide, but the level of the increase in cost seen in October is expected to fall in the coming months. PG&E is currently estimating that natural gas bills for December and January will be 40-50% higher compared with last year. While the price of natural gas in California is high, costs in the other parts of the country have surged even more, with some utilities reporting bill increases in the triple digits. PG&E will continue its practice of helping control prices for customers this winter by using gas currently held in underground storage that was purchased in the spring and summer when prices were lower. PG&E does not profit from higher gas prices and instead receives a fee for delivering the fuel. That delivery charge does not change based upon the cost of the fuel.

Residential Natural Gas Cost Comparison:

AVERAGE RESIDENTIAL CUSTOMER	October-05	September-05	Percentage Change from Sept. -05	October-04	Percentage Change from Oct. -04
Therms of Gas Used	25	22	13.6%	25	0.0%
Cost of Gas Procurement (per therm)	$1.231	$0.905	36.0%	$0.562	119.1%
Average Transportation Charge (per therm)	$0.412	$0.412	0.0%	$0.395	4.4%
Total Rate	$1.643	$1.317	24.8%	$0.956	71.8%
Public Purpose Program (PPP) Surcharge	$0.041	$0.041	0.0%	$0.030	39.0%
Total Rate (including PPP Surcharge)	$1.684	$1.358	24.0%	$0.986	70.8%
Total Natural Gas Bills (including PPP Surcharge)	$42.10	$29.88	40.9%	$24.65	70.8%

Notes: Using recorded average monthly use (from GH most recent month available) and average transportation rate for bill calculation. Therm: A measurement for natural gas. One therm contains thermal energy equivalent to 100,000 British thermal units. Procurement: The cost of the natural gas itself delivered to PG&E's local transmission system. Procurement costs fluctuate on a monthly basis, based on market prices. Transportation: The cost of transporting the gas to PG&E's customers on PG&E's local transmission and distribution system. The transportation rate included here is an annual average of the baseline and excess rates. Public Purpose Program (PPP) Surcharge: Prior to March 1, 2005, the transportation rate included public purpose program surcharges mandated by state. In compliance with D. 04-08-010, issued August 19, 2004, gas PPP surcharges are removed from gas transportation rates effective March 1, 2005.