Talk about your sticker shock.

Effective today, National Fuel Gas Distribution Corp., will
raise its natural gas rates by 22.8 percent – or $349.47 a year –
marking the company’s largest dollar increase in its history.

With the hike, a typical residential customer’s annual bill will
rise from $1,534.30 to $1,883.77, the company announced Monday.

“This quarterly adjustment is necessary to more accurately
reflect the price of natural gas purchased by the company for its
customers,” National Gas Senior Manager of Corporate Communications
Nancy Taylor said. “We have been looking at a supply situation that
just keeps getting tighter and tighter.”

Taylor said the last large spike in price came in February 2001,
when costs went up by 24.5 percent. A typical residential customer
uses 105,000 cubic feet of natural gas a year.

“The price really varies greatly, even daily,” Taylor said. “Up
until August we had an 8.1 percent increase. Before that, it went
up and down in the three percent range. Overall, we have really had
small increases, but steadily since November 2003 they have just
been adding up and there has not been a decrease.

“Conservation and more efficient appliances had helped bring
that down,” Taylor added. In fact, at one point two years ago the
price did go down by 3.1 percent.

For National Fuel customers, rates are adjusted on a quarterly
basis with an annual reconciliation, while New York state customers
experience monthly adjustments to account for changes in the
marketplace price of natural gas.

The company files its new rates with the Pennsylvania Public
Utility Commission.

Taylor said increases in the wholesale price of natural gas is
affecting customers nationwide, adding the American Gas Association
has indicated that this summer’s very warm weather, along with
hurricanes Katrina and Rita, have strained an already tight natural
gas market, pushing prices upward.

“As a result, natural gas utility companies have been forced to
purchase their natural gas at a much higher price than ever
before,” Taylor said, adding the company does not make a profit on
the cost of gas; the purchase price is passed along to the customer
dollar-for-dollar.

“We recognize that recent increases in gas costs, combined with
the upcoming cold weather, will result in energy bills that are
considerably higher than at this time last year. Customers should
prepare now for that colder weather. We urge them to take steps to
make sure their homes are energy efficient.”

Taylor said while natural gas prices used to peak in the winter,
that is not solely the case anymore.

“Prices have been staying higher in the summer because of the
electric generation in extremely warm weather,” Taylor said.
“Natural gas has been the fuel of choice because it’s
environmentally friendly. But, while that is the case, most
everything now that is being built is being fueled with natural
gas, causing the price to go up.”

According to Taylor, some of the steps customers can take to
help stem costs are seal drafts around doors and windows, insulate
attics and walls, check heating equipment and appliances to make
sure they are operating at peak efficiency and turn back
thermostats by 10 degrees, especially when away for four to six
hours at a time.

“People can save 20 percent on their usage by just adding
insulation to their attic,” Taylor said. “A new energy efficient
furnace can save 30 percent.”

Taylor said the company is not recommending households with
elderly people or little children turn down the heat.

Meanwhile, in order to pay for the increase, Taylor said the
company is offering an Energy Partnership Savings Card, which
offers discounts on a wide range of efficiency products and
services – everything from insulation and weather stripping to
furnace cleanings and inspections – from vendors throughout the
area. The program is free.

To inquire about the card, a customer can contact
1-866-757-TIPS, leave their name and full mailing address. A card,
along with a list of participating vendors, will then be sent by
mail. Customers can also download and print the information from
National Fuel’s Web site.

In addition, customers can contact the company and discuss
payment programs and services, including the budget plan that
allows customers to level out their bills over a year. National
Fuel also has programs specifically designed for low-income
customers. For more information, contact 1-800-365-3234.

“I certainly do encourage people to change payment plans,”
Taylor said. “As bills get higher and higher, in order to fit into
the average person’s budget, it’s almost becoming a necessity.”

National Fuel serves approximately 214,000 customers in 14
counties in northwestern Pennsylvania.