News Release

Huntsville Utilities Reduces Natural Gas Rates By 6.25%

November 29, 2005

Natural gas customers of Huntsville Utilities will be paying less to heat their homes beginning this week.

The Huntsville Utilities announced today a 6.25% rate decrease for the utilities' natural gas customers. The rates for Huntsville Utilities' residential customers are being lowered by just over a dollar per one thousand cubic feet (1,000 mcf) from $16.48 to $15.45. The new rate will be effective on meter readings beginning December 1.

With the new rate, the average gas customer could see their monthly bill reduced by up to $10 a month. A customer using 10,000 cubic feet of gas will have a bill of $157.00, which includes a $2.50 monthly customer charge. Under the old rate, the same usage would result in a bill of $167.30. The average usage of 10,000 cubic feet per month is based on a 1,800 square foot house using natural gas for heating and water heating.

This reduction follows two rate increases that took place in September and October when natural gas prices were at the highest level in history. Hurricane activity in the Gulf of Mexico created short-term supply disruptions as nearly 100% of natural gas production was halted for a period of time during Hurricane Katrina in August and Hurricane Rita in September. Before Katrina, some natural gas production had just recovered from Hurricane Ivan that hit the Gulf Coast last September.

Natural gas is a commodity traded on the Futures Market of the New York Mercantile Exchange ("NYMEX"). Pricing on NYMEX directly influences the price paid for natural gas by Huntsville Utilities. The cost customers pay for natural gas reflects what Huntsville Utilities pays for gas supplies it obtains from the gas production areas along the Gulf coast. Huntsville Utilities does not earn a profit on the cost of the gas purchased to meet system requirements.

"The rate decrease is the direct result of the recent easing of price pressures on natural gas," stated utility spokesman Bill Yell. " We were able to purchase our projected gas supply for the months of December through February at prices lower than the market prices earlier this fall," Yell said.

"If we experience a normal winter this year, the rates should remain where there are for the entire heating season," Yell added.

The Huntsville Utilities gas system is the largest public gas system in Alabama serving over 44,000 customers in Huntsville and Madison County.