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Alle-Kiski Valley natural gas customers getting break on bills

| Sunday, Jan. 25, 2009

Many Alle-Kiski Valley homeowners are about to see a decrease in their natural gas rates.

T.W. Phillips Gas. & Oil Co. will cut its residential rates for the quarter beginning Feb. 1 by about 10 percent.

That continues a downward trend in rates by Pittsburgh-area providers. Several other companies cut their residential rates in January.

Jay Dawson, spokesman for Butler-based T.W. Phillips, said two reasons exist for the reduction:

• An increased supply of local gas because of more wells drilled in Western Pennsylvania.

• A decrease in demand from industrial customers hit by the economic slowdown.

Residents may not notice the drop immediately, however, since it has been a colder winter so far than last year. That increases the amount of gas needed to keep a home warm.

According to the National Weather Service Web site in Pittsburgh, the average temperature for January so far is about 23 degrees -- or five degrees below normal.

Many area homeowners recently got monthly gas bills for $300 or higher.

The current T.W. Phillips residential rate is $15.4 per mcf, or 1,000 cubic feet.

Dawson said the rate reduction would be in the range of $1.30 to $1.70 per mcf, about a 10 percent rate cut.

The lower rate will be in effect for the next three months. It is the second consecution quarterly reduction. In November, T.W. Phillips reduced its rates by $1.30 mcf.

The average Phillips residential customer uses about 100 mcf a year.

But from November to March, usage might be 20 to 30 mcf a month, Dawson said, depending on temperatures and how high a family sets its thermostat.

Gas bills include two main charges: for the purchase cost of natural gas and the cost of delivery. As of November, Phillips' purchase cost was 9.8 cents per mcf and 3.8 cents per mcf for delivery.

The price of American natural gas is set by the New York Mercantile Exchange, Dawson said. But the cost varies daily.

That price soared a couple years ago because of demand -- to as high as 12 to 14 cents per mcf, Dawson said.

That brought new gas well drillers to the Valley, leading to increased supplies.

Armstrong County has seen a huge increase in gas well drilling, for instance.

"The majority of gas we buy is from Pennsylvania producers," Dawson said.

The company has 60,000 customers in Western Pennsylvania and is the main supplier of gas to communities in the Alle-Kiski Valley. It has customers in 10 area counties, including Allegheny, Armstrong, Butler and Westmoreland.

Dawson said about 50 percent of its sales are to commercial users, even though the vast majority of its customers are residential.

Three other company rate reductions were approved by the Public Utility Commission as of Jan. 1, also by about 10 percent.

Dominion Peoples dropped to $10.66/mcf for the first quarter of 2009, Columbia Gas is down to $11.57/mcf and Equitable Gas dropped to $13.07/mcf.

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