In November 2003, Clearwater Gas System (CGS) worked with Peoples Gas on building a gas pipe interconnect between the two systems in an effort to increase system reliability in Pasco County. CGS has a territory agreement with Peoples that clearly defines the geographic area where each utility can serve customers. It makes sense where the two piping systems meet up, there should be some kind of connection point that serves as a two-way path in case either utility encounters a problem on their system. The interconnect will serve as a backup for most of CGS's existing one-way feed lines in Pasco County. If additional gas pressure is needed, the transfer station is designed to open automatically when distribution pressure on either side lowers below a certain level. Both Peoples and CGS determined the location and shared in the cost to construct the transfer station. ♦

Sunshine One-Call Update

If you are planning on doing any excavation at your facility, please remember to call the Florida Sunshine One-Call notification system. This "call before you dig" phone number is designed to notify the appropriate utilities so they can locate their buried lines before you start excavating. As of January 1, 2004 the State law governing the handling of these calls has changed so that the utility is required to handle ALL calls within 48 hours of receipt. This should help expedite requests and reduce the number of accidents that occur. ♦

Natural Gas Prices Continue to Bounce at High Levels

As we enter the New Year, energy prices remain at high levels and with extreme volatility. The natural gas market is swinging by 70 cents per million Btu (MMBtu) on certain days. These high price swings usually occur on days when a cold weather forecast is issued. Once the cold front has passed, the prices will typically retract back to their original position. On 1/9/04, the onset of major cold weather, the price of gas was $6.90 per MMBtu. However, prices have lowered into the $6.30 range for the week of 1/12. In addition, gas storage is 8.3% above the five-year average. So fundamentally this should not affect prices the way it has. Unfortunately, many market players are still concerned about the supply/demand mix in this country and that continued cold weather will dwindle down all the excess supply. Therefore this volatile trend is expected to continue until we have a better idea of how much storage will remain by the end of winter.

Some other important factors that impact prices are the number rigs actively drilling for natural gas. On 12/31/03, the US rig count was at 966 which is the highest it’s been in the past two years. In addition, crude oil prices are currently trading over $30 per barrel, which helps to keep natural gas prices elevated.

The Energy Information Administration (EIA) has released their predictions on natural gas prices for the next few months. They expect prices to average $5.57 for January, $5.40 for February and $4.77 for March. The average price for the entire year is expected to be about $5.00 per MMBtu. ♦

The energy bill failed to pass in the senate by two votes last November. The main reason for the senate filibuster was the provision in the bill that protected makers of fuel additive MTBE (methyl-tertiary-butyl-ether). MTBE is a suspected carcinogen that has contaminated underground water supplies in many cities. Democratic Leader Senator Tom Daschle said that dropping the MTBE provision would produce enough votes to pass the bill. However, Republican House Majority Leader Tom DeLay has rejected any proposal to remove the MTBE provision. This provision would prevent any new MTBE lawsuits from being filed after September 5, 2003. Overall the energy bill, if passed, would offer 31 billion dollars in tax incentives for oil, gas, nuclear and other energy sources. ♦