Message-ID: <9585240.1075844190399.JavaMail.evans@thyme> Date: Tue, 19 Sep 2000 04:44:00 -0700 (PDT) From: robert.neustaedter@enron.com To: steven.kean@enron.com, mark.palmer@enron.com Subject: Natural Gas Price Increase Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 7bit X-From: Robert Neustaedter X-To: Steven J Kean, Richard Shapiro@EES, James D Steffes@EES, Mark Palmer X-cc: Harry Kingerski@EES X-bcc: X-Folder: \Richard_Shapiro_June2001\Notes Folders\All documents X-Origin: SHAPIRO-R X-FileName: rshapiro.nsf As discussed in last Friday's meeting on strategies related to higher energy prices, Harry asked me to develop the attached projection of delivered gas prices for this winter. The projection is based upon EIA's monthly analysis of delivered gas prices for residential, commercial and industrial customers for selected states (Connecticut, Virginia, Illinois and Texas) for the 1999-2000 winter heating season (Nov-Mar). Assuming pipeline and LDC mark-ups remain constant, the delivered prices were adjusted for the NYMEX Henry Hub projection of wellhead prices for the 2000-2001 winter period. A national projection is also included. Because the commodity portion of the gas bill for residential customers is a smaller percent of the total bill compared to commercial and industrial customers, the increase for residential customers will be less pronounced than for commercial or industrial customers. In addition, LDC purchased gas cost mechanisms will moderate the effect of the price increase to some extent because monthly price increases are averaged out over an extended period (12 months in some cases). Furthermore, some state public utility commissions (e.g. Connecticut) are conducting meetings with LDCs to discuss looking for ways to lessen the impact of the projected increases. That being said, Nipsco recently announced residential prices are expected to increase 50-60% this winter over last winter (in line with the projection for Illinois). If you are interested in a similar projection for other states, or have comments with respect to the above let me know.