Under a restructuring agreement with state regulators, Niagara Mohawk Power Corp., a unit of Niagara Mohawk Holdings, Syracuse, NY, will freeze natural gas rates through August 2003. The agreement also calls for Niagara Mohawk to implement educational programs to increased competition in the natural gas marketplace.
Joseph T. Ash, vice-president of gas delivery, noted that, in addition to charges for Niagara Mohawk's delivery services, natural gas bills also include charges that reflect the costs of purchasing the gas commodity and transporting it to the company's distribution system.
He said the commodity costs reflected in bills will continue to be based on the market price of natural gas and will fluctuate with market conditions. The price Niagara Mohawk pays for natural gas at the wellhead is passed through to customers without markup. He noted market conditions have combined to increase gas commodity prices significantly over the past year.
Under the interim gas agreement, residential customers experienced an average 2-3% reduction in monthly natural gas bills because of lower pipeline transportation costs. Niagara Mohawk's large natural gas customers have been able to choose suppliers since 1986, while all other customers were eligible in 1996. To date, approximately 12,500 natural gas customers have chosen an alternative natural gas supplier. There are 19 marketers offering natural gas to residential customers and 42 marketers serving commercial and industrial users.
The most recent previous adjustment to the company's overall price structure took place in 1996 and led to an annualized $10 million reduction in overall transportation and delivery charges. The company delivers natural gas to more than 540,000 customers and provides electricity to more than 1.5 million customers in upstate New York.
