We at your Public Service Commission are very concerned about the nationwide increase in the cost of natural gas and its effects on the citizens of Alabama.

The current skyrocketing wholesale natural gas prices are a national problem n really, a North American problem.

We regulate Alabama Gas Corporation, Mobile Gas Service Corporation, and Wheeler Basin Natural Gas Company, which are local distribution companies (LDCs).

We do not regulate the rates of municipal gas systems or gas districts.

LDCs are not producers of natural gas.

Therefore, they must buy all their gas from producers and pay to have it transported to their systems.

None of the LDCs regulated by this Commission are making a profit from these increased rates they are forced to charge.

They are simply passing their actual dollar-for-dollar costs on to the customers, as the law allows.

The wholesale price that LDCs have to pay for the gas they purchase for you and me has increased fourfold n from about $2.35 per 1000 cubic feet (Mcf) in January 2000, to right at $10 in January 2001.

There are a lot of reasons for the rising costs, but it all comes down to supply and demand.

Supply is down because of reduced drilling for natural gas.

This has not always been true. For several years there was a glut of natural gas on the market.

Because of the surplus, natural gas was bringing producers less than $2.50 per Mcf, which was not high enough to encourage drilling.

Hence, most drilling ceased, and rigs fell idle.

At the same time, demand grew to an all-time high because of the booming economy and greater reliance nationwide on natural gas for electric generation.

The current higher prices have already spurred producers to start drilling new wells, but the supply will not likely catch up with demand for several months.

There is a light at the end of the tunnel, but, unhappily, we will probably not see it until after the next heating season.

Rest assured, however, there is enough gas to serve all residential and firm customers in Alabama.

The weather is adding to the problem.

We have just experienced the coldest December in Alabama history, which has caused bills to be drastically different from what we have been accustomed to in past years.

The past several winters have been comparatively mild, balmy even, allowing us to enjoy heating bills that were not really representative of normal winters.

We are working with LDCs such as Alagasco and Mobile Gas to evaluate available energy risk management tools to mitigate gas cost increases.

Your PSC is far ahead of many commissions around the nation, and particularly in the southeast, because we are encouraging the use of energy risk management tools.

Over time, we expect Alabama consumers will continue to benefit from savings as LDCs utilize these tools in their gas purchasing portfolios.

For most of us, these bills put a strain on our budgets, but for some Alabamians they are a real hardship.

There is help available to those who qualify for assistance with their energy bills.

Your local LDC office can help put you in contact with the proper agency or assist in developing other payment arrangements.

If anyone is having difficulty making arrangements for a payment schedule with a PSC-regulated company, I would ask you to call our Consumer Services Office at 1-800-392-8050, or call my office at 334-242-5191.

My staff and I will do all we can to assist you with the particular company servicing you.

Finally, please consider some simple, remedial conservation measures, such as lower thermostat settings and new weather-stripping around doors and windows.

Remember to turn off kitchen and bathroom exhaust fans as soon as they aren't needed.

Leave curtains open on sunny days, but closed at night.

Because of current gas costs, the payoff for such measures has never been better.

It is a privilege to serve the people of Alabama as a Public Service Commissioner.

The PSC will continue striving to keep costs as low as possible so that Alabamians will pay no more than necessary.

I must thank the staff at the PSC for the professionalism and dedicated efforts during this difficult time.

Bob Reed, Natural Gas Supervisor, has worked tirelessly on this matter and we are fortunate to have an individual of his caliber serving the people of Alabama.

The depth of personal concern for the people of Alabama who have had this burden placed on them is a treatment to the depth of caring by Bob and the rest of our staff, and for that I will always be grateful.

Together we can meet this challenge.