Effective January 1, 2006 Progress Energy will raise their fuel rate by approximately 1.4 cents per kilowatt-hour (kwh) for the average non-demand commercial customer. This is a 36% increase from the previous fuel rate that was approved by the Florida Public Service Commission in August 2005. In addition, residential fuel rates will increase by 36% for a typical consumer that averages 1,500 kwh per month. Increases are a result of higher fuel costs to operate the power plants. ♦

Clearwater Gas prepares for RP 1162

On June 20, 2005 the Office of Pipeline Safety (OPS) issued a final rule requiring pipeline operators to develop and implement public awareness programs consistent with the requirements of the Pipeline Safety Improvement Act of 2002. This new rule, called RP 1162, seeks to improve public awareness of pipeline operations & safety issues through enhanced communications with the general public, state & local officials, local public officials and excavators. Operators must have completed their programs no later than June 20, 2006. RP 1162 was developed in 2004 through the efforts of pipeline representatives, federal and state pipeline regulators and the public. Clearwater Gas is fully prepared to comply with the scheduled deadline. Expect to see information regarding RP 1162 in your mail by Spring 2006. ♦

Natural Gas remains above the $10 per MMBtu level

We're ending 2005 with bullish natural gas prices. As of December 28th, NYMEX futures for January settled at $11.30 per million Btu (MMBtu), however earlier in the month it went as high as $15. During the month of December heating demand was very high due to artic air blanketing most of the Country. Although later in the month the cold weather subsided, leading to lower demand. This has resulted in a decrease in gas prices, but unfortunately not enough to push us below the psychological $10 level.

Over the past year, the average price of natural gas has been about $9 per MMBtu. Of course, large increases occurred after Hurricane Katrina hit the gulf coast, which immediately shut-in approximately 85% of the natural gas production in the Gulf of Mexico region. As of December 2005 most of these damaged wells have been fixed and are now producing. However, about 20% of natural gas production (1.96 BCF/day) is still shut-in due to Hurricanes Katrina & Rita.

With all the production losses, how has it affected our ability to store gas for the winter heating season? The most recent Energy Information Administration (EIA) storage report indicates that gas storage is currently at 2,802 BCF, which is 2.3% above the 5-yr average. Although with recent cold weather, the excess storage is shrinking and supplies could fall below the 5-yr average is we have sustained cold weather during the winter months. If this occurs, then prices will probably stay above the $10 for the remainder of winter. ♦