What is the outlook for natural gas prices this winter?
Natural gas customers can expect to face significantly higher energy bills this winter –especially if winter weather is colder than it was last year. The following factors are driving the forecasted increase:

• Storm activity: even prior to Hurricane Katrina, natural gas production from the Gulf of Mexico, where North Carolina receives most of its natural gas, was recovering from the effects of an earlier storm (Hurricane Ivan).
• The damage from Katrina and Rita created further disruption, which has resulted in additional price spikes.
• Recent history: natural gas reserve and production increases continue to struggle to keep pace with demand. This tight balance between supply and demand creates frequent and unpredictable price swings.
• Also, the natural gas market has a tendency to follow crude oil prices, which have also fluctuated significantly in recent months. In fact, crude oil prices exceeded $70/barrel following Hurricane Katrina.
• Electric generation demand: an increasing amount of natural gas is being used to generate electricity, particularly during the summer months when natural gas utilities are typically building their storage levels.
• Weather: of all the factors that drive prices, weather has the greatest impact. Colder than normal weather in the winter puts a strain on supplies and this usually drives up wholesale market prices, which can ultimately affect consumers. Plus, warmer than normal weather in the summer creates the huge electric generation demand mentioned previously.

How do high natural gas prices affect PSNC Energy's rates?
PSNC Energy purchases natural gas on the wholesale market and brings that gas to North Carolina. This purchased gas component of our rates has the greatest impact on what PSNC Energy customers pay for natural gas service – it can account for anywhere from 50 to 70 percent of the company's overall rates based on the benchmark cost of gas. PSNC Energy does not make a profit on the purchased gas component of its rates. This component of the company's rates is passed directly to customers as allowed by the state regulations.

Why is natural gas a popular fuel?
Because of its unmatched level of comfort, convenience and reliability, natural gas remains one of the most popular energy choices available. In fact, 52 percent of all heated U.S. households have natural gas heat. In addition, natural gas is a clean-burning, environmentally friendly option. PSNC Energy remains committed to providing customers with safe and reliable natural gas options that enhance their quality of life.

What can I do to conserve energy?

• Set your thermostat to 68 degrees or lower.
• Keep your fireplace damper closed.
• Wash clothes in cold water and use your dryer only when you have a full load. Keep lint filters clean.
• Have your heating system tuned up by a professional heating contractor.
• Open shades and drapes on sunny days to help warm the house. Close them at night to retain the heat.
• Add attic insulation, caulk around windows and replace old weather stripping around doors.
• Make sure your water heater is set to "normal" or "medium" setting (usually 120 degrees)
• Remember to turn off a kitchen or bathroom ventilation fan to prevent heat from being drawn outside.
• Keep doors inside your home open to keep air circulating and improve efficiency of heating system.

Where can I go to get more information about energy conservation?
Go to the Manage Energy Use section of our website for more saving energy ideas, tools for estimating your monthly gas bill and calculating appliance usage.