Chuck Warrington, Managing Director & Executive Officer of Clearwater Gas System, has been named Chairman of the American Public Gas Association (APGA). This is a national non-profit association of municipally owned natural gas distribution systems, with 585 members in 36 states. The organization primary deals with regulatory issues that currently face the natural gas industry. Warrington has been an APGA officer since 1994 and participates in many industry and community associations including the Florida Municipal Natural Gas Association, the Florida Natural Gas Association, the Florida Engineering Society, the Clearwater Regional Chamber of Commerce, the Rotary Club of Clearwater, and the United Way of Tampa Bay. ♦

Natural Gas Storage

Working natural gas in storage is estimated to have reached 3,149 billion cubic feet (bcf) at the end of October, approximately 5% above the 5-year average. Storage levels are now about equal to year-ago levels, although end-October levels in 2002 were still quite high. Storage is expected to remain above average levels at least through the beginning of the next heating season. ♦

Over the past three years, we've seen natural gas prices quadruple, fall back to "normal" levels, and then rise above historical base prices. So what do we consider normal? Obviously the world has changed in the past few years, and what we expected as the norm a few short years ago is no longer the case for energy commodity prices. Why are fuel prices elevated? As with most issues, there are several factors at play. The growth of the energy futures market has impacted the volatility of natural gas prices. Traders constantly buy and sell futures on the NYMEX (New York Mercantile Exchange). These traders are not end-users who buy and sell natural gas for use in their factories or businesses, but rather speculators who make a profit by controlling contracts for gas purchases at a future date. Some other factors in the price of natural gas include:

Power Plants - use of natural gas for generation of electricity has increased significantly over the past three years as electric utilities increasingly choose natural gas to fuel new and renovated power plants. Because it is environmentally friendly, natural gas has become the fuel of choice for electric utilities.

Exploration and Production - While the increased capacity and the planned new capacity of gas-burning power plants may be pushing natural gas prices upward, there has been some concern that natural gas production, as well as drilling and exploration, have recently fallen off.

Crude Oil- A general apprehensiveness in the market resulting from the current state of affairs in the oil-exporting Middle East and its effect on world crude oil prices may also be exerting upward pressure on natural gas prices.

Experts do not expect the volatility in the natural gas market to subside any time soon. And no one can forecast with certainty the best time to buy gas in a volatile commodity market. To mitigate the effects of market swings on our customers, Clearwater Gas uses a diversified approach in buying natural gas. We join other municipal gas systems in the state to leverage our buying power, and we purchase natural gas "strips" of varying quantities at staggered time periods. As a public gas system, we are mindful of our obligation to our customers and community and we are committed to managing fuel costs so that we may offer you, our customer, the most economical fuel rate possible. ♦

United Way Campaign

Every year, Clearwater Gas System participates in the United Way Campaign. This year our company pledged a total of $12,513. These funds will be distributed among United Way's 78 partner agencies throughout the 2003 calendar year, which will make a real difference in the Tampa Bay area. ♦