January 4, 2001

COMMISSION ORDERS INDIANA GAS TO SHARE BURDEN OF HIGH HEATING COSTS

While the Indiana Utility Regulatory Commission has no control over the price of natural gas, it can scrutinize Indiana Gas Company’s purchasing practices. In approving the company’s request for a Gas Cost Adjustment for December, January and February the Commission sent a strong message to natural gas companies that purchasing practices will be closely examined.

In Cause No.37394-GCA 68, the Commissioners said that Indiana Gas Company’s planning and procurement process was inadequate to address the extreme volatility and price increases present in the gas supply market, therefore; Indiana Gas will not be allowed to recoup $3.796 million.

“We are disturbed that IGC was not more concerned about price risk or mitigation for its customers, and that a more sophisticated process was not in place to ensure a thorough consideration and analyses of possible volatility mitigation measures.”

The Commission realizes that it must also protect the viability of Indiana Gas in an unregulated gas market and has approved the company’s request for January and February, which should result in slightly lower heating costs for January and February. The effect of this Gas Cost Adjustment is shown in the following table.

Proposed Maximum* vs. Currently Approved (December 2000) Interim GCA Factor For Residential Customers

Consumption Dth		Bill at Proposed Maximum GCA Factor	Bill at Currently Approved GCA Factor		Dollar Increase (Decrease)			Percent Change

5	$51.27			$52.97		($1.70)	(3.21%)
10	90.38			93.78		($3.40)	(3.63%)
15	129.49			134.59		($5.10)	(3.79%)
20	168.60			175.40		($6.80)	(3.88%)
25	207.71			216.21		($8.50)	(3.93%)

* Comparison uses an average of the January and February 2001 Maximum GCA factors

These comparisons utilize the maximum GCAs approved in this Order. However, should Indiana Gas implement decreases from the maximum approved GCAs, the impact upon a residential customer’s monthly bill will be lessened.

~30~