Natural Gas Prices FAQ

This heating season we anticipate lower wholesale natural gas prices due to a number of factors, according to the U.S. Energy Information Administration.

Factors that have resulted in lower natural gas prices include:

No disruptions to natural gas production caused by hurricanes.
Historically high levels in storage – near full capacity.
Mild winters that contribute to reduced consumption.
Normal summer of 2007 that did not strain natural gas resources (natural gas is increasingly used at newer “peaker” power plants (such as the Emery Generating Station near Mason City, Iowa) that generate extra electricity during periods of peak demand during summer heat waves.

What factors drive natural gas volatility?

There are several: weather is the biggest factor. We were spared any impact from hurricanes this season; with the warmer than normal late spring and early summer there was an increased use of natural gas to fuel electric generation, world oil prices that continue to be volatile, continued economic strength and limited drilling/exploration in domestic natural gas production.

What is the current natural gas pricing outlook for Alliant Energy customers?

Outlook to be announced October 9, 2007.

Will Alliant Energy be able to meet customer demand this winter?

Alliant Energy has enough natural gas in storage and has secured contracted pricing to meet customer demand this heating season. If you are a transport customer, please contact your broker.

Does Alliant Energy profit from higher natural gas prices?

Natural gas producers and the marketplace set prices. Alliant Energy and other utilities pay wholesale market prices. When natural gas prices are low, we pass those savings on to you. When prices are high, those increases are reflected on your bill as well.

What is Alliant Energy doing to help customers?

Alliant Energy is doing many things. Although we can’t control the wholesale price of natural gas, we do manage prices for our customers by using certain financial tools, such as futures contracts and weather risk insurance to “hedge” price volatility. (It’s important to note that while hedging doesn’t necessarily translate into lower prices for customers, it can be effective in reducing the volatility of prices customers ultimately pay.) We also keep an eye on the market price of natural gas. We buy and store it when prices are low. We make every effort to keep customers informed about energy-efficiency programs, products and services that can help hold down their energy bills.)

[NOTE: Alliant Energy’s own generation portfolio consists of 6 percent (and growing) natural gas. Purchased power makes up 32 percent of Alliant Energy’s supply and also contains increasing amounts of natural gas and renewable energy sources.]

How much higher could your bill go?

The increasing volatility of wholesale natural gas prices is a national issue with very significant local impacts. Other factors influencing your natural gas bill include the size and energy-efficiency of your facilities, processes and equipment and the severity of winter temperatures.

What can customers do to hold down their natural gas bills?

Energy-efficiency solutions are your best defense against natural gas volatility. Alliant Energy is committed to creating and offering products and services that help our customers deal with the impact of increased price levels and volatility in natural gas. Some low-cost, no-cost ways for you to hold down your company’s energy bill include:

Check equipment to insure it is operating at maximum efficiency
Consider installing more modern, energy-efficient equipment where possible
Repair all broken and cracked windows
Make your facility more energy efficient by caulking around windows and doors and adding insulation
Turn your thermostats down wherever and whenever possible

For additional information and updates on natural gas prices, news, trends and energy-efficiency suggestions, visit the following Web sites:

Alliant Energy www.alliantenergy.com/naturalgas
Minnesota Public Utilities Commission www.puc.state.mn.us
American Gas Association www.aga.org
Illinois Commerce Commission www.icc.state.il.us
U.S. Department of Energy www.energy.gov
Wisconsin Public Service Commission www.psc.wi.gov
State of Iowa Utilities Board www.state.ia.us/iub

Contact your account manager today! They will have more ideas for helping you reduce your energy bill by making your facility more energy efficient.

Ask to receive Alliant Energy’s monthly Natural Gas Update by fax or e-mail. The Natural Gas Update provides details on the month’s news in natural gas including current prices, supply/demand drivers and tips for energy-efficiency. Contact your account manger for details.

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