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Warm weather is reducing heating bills However, exactly how much a typical residential customer will save isn't clear yet

These balmy winter days are bringing welcome relief for natural gas heating bills.

The combination of a better than 20 percent drop in the rates that National Fuel Gas Co. has charged its residential customer over the last three months and temperatures since the beginning of November that are running more than 20 percent above normal are helping to hold down heating bills this winter.

But that doesn't mean heating costs have gotten cheap.

National Fuel's rates are down from the record high prices it charged last winter, when natural gas prices soared, but still are at historically high levels. And while the unusually seasonable temperatures mean that consumers are using less gas, it still has been cold enough to keep furnaces running fairly regularly.

But that doesn't mean heating costs have gotten cheap.

National Fuel's rates are down from the record high prices it charged last winter, when natural gas prices soared, but still are at historically high levels. And while the unusually seasonable temperatures mean that consumers are using less gas, it still has been cold enough to keep furnaces running fairly regularly.

This month, National Fuel's residential rates are 19 percent less than the company charged in January 2006, when the impact of the natural gas price spike was at its peak. While the January rate of $13.06 per 1,000 cubic feet is slightly less than National Fuel's average monthly rates for all of 2005 and 2006, it still is the third-highest January rate ever.

Exactly how much a typical residential customer will save isn't clear yet, since National Fuel officials on Friday still were compiling data on the average gas consumption and total December bills of its customers.

But Julie Coppola Cox, a National Fuel spokeswoman, said the warm weather and lower gas prices are putting consumers on a pace for winter heating bills that will be noticeably less than the $1,033 that company officials forecast back in October and well below the $1,085 average heating cost of last winter.

"It certainly has a good impact," said Cox, who nevertheless warned that a prolonged cold snap could drive prices -- and consumption -- higher again.

"Clearly this is good news, with this kind of weather and reduced demand," she said.

With the warm weather across the country reducing gas consumption, natural gas supplies are unusually robust. The Energy Department reported Friday that natural gas inventories are 13 percent above their five-year average and at the highest levels for the first week in January since industry and government agencies began compiling storage data in the current manner in 1993.

That has helped push down natural gas commodity prices by almost $3 per 1,000 cubic feet since late November. Gas for February delivery climbed 2 cents Friday to $6.18, down 30 percent from $8.87 on Nov. 29.

Those ample supplies have caused a plunge in natural gas prices since hitting a record high of $15.38 per 1,000 cubic feet on Dec. 13, 2005, as damage from hurricanes Rita and Katrina devastated gas production in the Gulf of Mexico.

Even so, natural gas commodity prices still have tripled over the past six years as demand has grown because of increased use of the fuel by businesses and factories as the economy strengthened and new power plants that burn natural gas came on line.

National Fuel's residential rates do not move in lock-step with commodity prices because the utility, with the backing of state regulators, lines up its expected winter supplies by mid-fall.

The utility relies heavily on gas purchased in advance with fixed-price contracts to provide consumers with more stable pricing. Even before the winter heating season began, National Fuel already had fixed the price of almost 60 percent of the natural gas that the utility expected to supply to its customers this winter, Cox said.

National Fuel sells the gas to its customers at cost. The company makes its profit from the state-regulated delivery charge that is included in its rates.
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