Atmos Energy Files for Gas Cost Adjustment in Colorado

October 31, 2003

Atmos Energy Corporation today filed with the Colorado Public Utilities Commission for a gas cost adjustment to reflect a decrease in costs of natural gas it is buying for its Colorado customers.

The gas cost adjustment, if approved by the CPUC, would decrease the current residential gas commodity rate by 6.5 percent, from $0.85 per hundred cubic feet (ccf) to $0.79 per ccf. Gas commodity rates for commercial customers would also decrease by 6.5 percent, from $0.91 per ccf to $0.84 per ccf.

Atmos Energy officials said this decrease comes about as the price of natural gas is higher than it was a year ago, but lower than it was projected to be when the company last set rates on April 1, 2003. If approved by the commission, this decrease will take effect November 1, 2003.

In March 2003, the CPUC approved a 20 percent increase in Atmos Energy’s gas cost adjustment and in April 2003 approved a 22 percent increase based on the utility’s forecast that gas costs would remain unusually high in advance of the 2003-2004 winter heating season.

"We never like to see the price of natural gas increase, because we know it can adversely affect individual, family and business budgets," said Gary Schlessman, president of Atmos Energy’s Colorado-Kansas Division.

"Atmos Energy does not make a profit on the natural gas we deliver," Schlessman said. "We buy it for our customers at the lowest prices available. We also make every effort to ensure price stability even though we have no control over natural gas commodity pricing."

Schlessman said efforts to minimize the effects of natural gas pricing on utility customers include purchasing natural gas through a yearly bidding process and buying about half of the utility’s projected winter supply in small increments throughout the summer when natural gas prices typically are lower.

"Our customers are charged, penny-for-penny, the same price for natural gas that we are charged," he said. "By purchasing projected winter gas supply during the summer months, Atmos Energy saved customers more than $26 million last year."

In the Lamar and Canon City area, the average residential customer uses 730 ccf per year. In 2002-2003, this would have cost the consumer $521; this next year, it will cost the consumer $684, a 31 percent difference. The average commercial customer using 2400 ccf will see an increase of 31 percent, or $535 annually, compared to the cost in 2002-2003.

Typically, January is the coldest month, with the average monthly residential consumption jumping to 130 ccf. Last heating season, 130 ccf cost the consumer $83; this year it will cost $112, a 35 percent increase. The average commercial customer using 420 ccf in January 2003 would have paid $281; this year, the same volume of gas will cost $375, a 33 percent increase.

Atmos Energy encourages customers to sign up for its levelized budget billing program to help even out the costs of winter gas bills, says Karen Wilkes, Atmos Energy’s manager of public affairs in Colorado.

"It only takes a few moments to sign up for budget billing. Customers can call our toll-free number at 1-888-442-1313, 24 hours a day, 7 days a week, or they can enroll on our Web site at www.atmosenergy.com," Wilkes said.

"Consumers can conserve energy by caulking windows, eliminating leaks around doors and adding attic insulation. Energy use also can be reduced by lowering the thermostat 5 degrees during the night while sleeping and by moving furniture, carpeting and draperies out of the way of heating ducts and air returns. Ensuring that home heating equipment is running efficiently by replacing the filter regularly and by having the furnace inspected by a heating contractor is money well spent in saving energy dollars," Wilkes said.

Consumers who need help paying their heating bills can call toll-free 1-866-432-8435. In addition, consumers who meet the income guidelines for the federally funded Low Income Energy Assistance Program, or LEAP, automatically qualify to have their homes weatherized by Energy Saving Partners.

LEAP applications are available at the toll-free number above or at many local social service agencies. LEAP provides energy assistance to individuals and families throughout Colorado.

Energy Outreach Colorado (formerly known as Colorado Energy Assistance Foundation) also assists consumers faced with unexpected needs caused by a layoff or a serious illness or injury. EOC supports LEAP by delivering additional funds from the utility industry and compassionate donors. Atmos Energy works closely with EOC by donating thousands of dollars a year itself to the organization and by matching every dollar of customer donations.

Every October, Atmos Energy files with the CPUC documentation of how much the company spent on natural gas the year before and what natural gas pricing is predicted to do during the coming year. If the utility spent more than it predicted on natural gas, the commodity charge for natural gas is increased. If the company spent less than it predicted, the charge is lowered.

The utility’s goal is to file a gas cost adjustment only once a year in October with the change to take effect on November 1. The CPUC can deny the gas cost adjustment filing but rarely does so because it is based on historical usage, documented purchases and a prudent gas purchasing plan.

"Filing once a year was routine when gas costs were less volatile," according to Joe Christian, vice president of rates and regulations for Atmos Energy’s Colorado-Kansas Division. "But in today’s market, natural gas prices can change dramatically, as they did in February when cold weather and increases in demand combined to send prices soaring. As a result, there are times we file several times in one year to adjust our customers’ gas costs."

"Although we are implementing a decrease at this time, if the outlook for gas continues to increase, we will have to re-file later in the winter and adjust rates upward," Christian said.

Atmos Energy’s Colorado-Kansas Division, based in Denver, serves approximately 104,000 natural gas utility customers in Colorado and 113,000 customers in Kansas.