October Gas Charge to Rise

CHICAGO, Sept. 29 /PRNewswire/ -- In October 2000, the Gas Charge rate on North Shore Gas customers' bills will increase by approximately 11 cents per therm over the September 2000 rate, primarily due to an increase in the market price of gas.

Customers should experience a slight increase in their gas bill due to the increase in the Gas Charge and a normal increase due to increased October gas consumption. Typical residential customers with gas space heating will experience a $7.14 increase in their October 2000 bill as compared with their September 2000 bill due to the increase in the gas charge. Any additional bill increase would be due to higher consumption in October, which is normally a colder month.

In a further indication of the coming winter's higher bills, the October 2000 per therm Gas Charge is approximately 26 cents higher than the Gas Charge for the month of October 1999. For typical residential customers with gas space heating, who will receive this billing in November, this increased gas charge will result in a $34.27 increase in their October 2000 bill as compared with their October 1999 bill, assuming normal October consumption.

However, there are steps that customers can take now to minimize the impact of the higher gas prices. One option is to enroll in the budget payment plan, which provides an easy way to manage gas bills. For more information about this program, visit our Web site at http://www.PeoplesEnergy.com or call 847-336-9300. Other options to consider: energy conservation, clean or change furnace filters monthly to increase efficiency, replace aging appliances, weatherize your home and request information on financial assistance programs.

There are a number of supply and demand forces driving the increase in the market cost of gas this October and in the upcoming winter. On the demand side nationally, storage inventories are significantly lower than a year ago. This increases the demand for gas to fill storage prior to the beginning of the heating season. Also increasing demand is the strong U.S. economy and increases in the costs of other winter fuels (heating oil and propane) that compete with natural gas.

On the supply side, during the past few years, the price producers could get for natural gas was low, contributing to a decline in production. Lower production coupled with increased demand has caused prices to rise recently. While these newer higher prices have stimulated an increase in exploration and drilling activity, it is unlikely to reduce gas prices this winter. North Shore Gas strives to provide reliable, low cost gas service, however, the market determines the price that North Shore Gas and all utilities pay for their gas supplies. The company passes on the cost of natural gas supplies to the customer without any markup or profit margin.

Aside from the Gas Charge, other components of the gas bill include service costs for gas delivery, and state and city taxes. These costs are not changing. Following is a comparison chart of the Gas Charge for customers of North

Shore Gas for the periods indicated:

Oct. 2000 Sept. 2000 Oct.1999 Gas charge cents/therm 63.34 51.85 37.06

Peoples Energy (NYSE: PGL) is a diversified energy company comprised of five primary business segments: Gas Distribution, Power Generation, Midstream Services, Retail Energy Services, and Oil and Gas Production. The Gas Distribution business serves about 1 million retail customers in Chicago and northeastern Illinois. Visit the Peoples Energy web site at http://www.PeoplesEnergy.com .

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-- Martin Thompson (mthom1927@aol.com), September 30, 2000