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Tiffany, you reallWe've recently discovered a new method to
calculate the cost of buying natural gas for our customers. This new
calculation method is more accurate than our old method and is much more
expressive. This new method results in a higher cost per heat than our old
method. We want to see if you agree with this higher cost and, if you do,
how you want it to impact your bill for February. Customers will see the new
calculation in effect on their next gas bill. This calculation affects only
customers on Direct Access and it will not affect any contracts with affiliate
companies.
Let me give you some details about how the cost is calculated: Purchases from
non-shipping affiliates are no longer included in our calculation. The
allocation cost has been eliminated.
Gas that is spilled during transport from the wellhead to the first delivery
point is now included in our calculation. Prior to this change, this gas was
not included.
When determining the cost of gas, we now start at the wellhead and move
forward to ourdelivery point. This calculation eliminates the prior
calculation method that used a constant rate for the entire gas pipeline
segment. In other words, if we buy gas from Wellhead 1 and transport it via
pipeline A to Wellhead 2, and then buy gas from Wellhead 2 and transport it
via pipeline B to our delivery point, the cost for the gas from Wellhead 2 is
not averaged with the cost for the gas from Wellhead 1. The Wellhead 1 gas
cost and the Wellhead 2 gas cost are totaled separately, and then divided by
two to determine our cost. This calculation resulted in a lower average cost
per heat content for our customers.
Because we calculate the cost of gas at the meter (our delivery point), we
must now make a new estimate of our fuel consumption costs. This will be
closely monitored to ensure the new method complies with our fuel
responsibility rules.
If you have any questions, please call me at 713-853-5028.
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