According to Sandra James, Director of Corporate Communications, "This increase is directly related to the increase in the market price of gas and reflects the cost of gas that has been, and will be, purchased by the company for its customers." Pennsylvania utility companies are permitted to update gas supply charges on a quarterly basis to reflect changes in the market price of natural gas. National Fuel's next opportunity to adjust gas supply charges will be August 1, 2014. Gas supply charges are passed along to customers dollar for dollar, with no mark-up or profit to National Fuel. This differs from delivery service charges, which reflect the company's other costs of doing business (including costs associated with installing and maintaining the local pipeline delivery system), and are determined by the PUC. Efficiencies gained by good management and a workforce that knows how to keep operation costs under control is how National Fuel has been able to maintain steady delivery rates, since January 2007.
"The prolonged, colder than normal winter resulted in increased demand for natural gas to heat homes and businesses," said James. That demand, in turn, resulted in an increase in the market price of natural gas. "National Fuel's buying strategies and good planning for the winter heating needs of our customers enabled us to provide uninterrupted service," James added. "We were also able to avoid an increase in gas costs for the previous quarter that began on Feb. 1, 2014, which would have had a profound impact on customers' bills during some of the coldest weather we've seen in some time."
National Fuel has a variety of natural gas supply sources and uses a combination of proven methods that allow flexibility to adjust purchases. Consequently, customers were somewhat insulated from price increases as more than half of the gas purchased this winter to heat their homes was based on summer and forward pricing strategies, the majority of which was placed into nearby, underground natural gas storage facilities. Through its gas management plan, National Fuel purchases natural gas at the best possible cost while ensuring security of supply and reliability of delivery.
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