Natural gas costs tumble, Yankee Gas customers benefit

Yankee Gas Services Company
P.O. Box 270
Hartford, CT 06141-0270
(800) 989-0900

www.yankeegas.com

News Release

Natural gas costs tumble, Yankee Gas customers benefit

MEDIA CONTACT:	Sandy St. Pierre
Office:	(203) 639-4423

MERIDEN, Conn., September 26, 2001 (NYSE: NU) -- Hit with sticker shock last winter when natural gas prices reached record highs, customers of Yankee Gas Services Company are now reaping the benefits of plunging energy prices. In its recent filing with the Connecticut Department of Public Utility Control (DPUC), Yankee Gas will lower its Purchased Gas Adjustment (PGA) by eight cents per Ccf, which is good news for gas customers. The PGA is a cost adjustment to customer bills to reflect the actual cost of natural gas, above what is already built into Yankee’s base rates. The PGA has been steadily decreasing since March.

“This is good news for our customers because it means money in their pockets,” said Dennis E. Welch, president and COO of Yankee Gas. “It was a difficult heating season for our customers last year, when gas prices rose dramatically. Although we must collect the full cost of gas from our customers, regardless of price, it’s great when we can also pass along the savings when prices drop.”

When gas costs were at their highest, Yankee was forced to collect a PGA of 52 cents per Ccf in February 2001, compared to 20 cents per Ccf that will be collected in October. For a typical residential heating customer using 71 Ccf in October, their bill will be approximately $87 in October 2001, compared to $99 in October 2000; that’s a decrease in their monthly bill of more than 12 percent.

Supply, demand outlook
On a national level, there are several factors which are having an impact on the price of natural gas:
q A slowing economy results in reduced demand
q National storage injections currently exceed historical levels – there is a secure supply going into the heating season
q A moderate summer with few prolonged periods of hot weather reduced demand for gas-fired generating plants to produce additional electricity
q Drilling and production are at historic high levels

“Natural gas is a commodity, driven by supply and demand in the market. The upside is that lower energy prices could actually assist with economic growth, lowering costs for businesses and consumers who use natural gas to heat their homes and run their businesses,” said Welch.

Although natural gas prices are currently low, a number of factors could impact prices during the upcoming winter heating season. “The weather is the biggest wild card in figuring energy costs,” said Welch. “As it gets colder, demand goes up and prices typically go up. If it gets colder than normal, that will have an even greater impact on demand and prices.

“The bottom line is that winter weather has always been unpredictable. What we know now is that we’re able to put money back in the pockets of our customers thanks to lower gas costs. That’s what’s important.”

Yankee Energy System, Inc.,(YES) which is part of the Northeast Utilities system, includes Yankee Gas Services Company, the largest natural gas distribution company in Connecticut serving approximately 187,000 customers in 69 cities and towns throughout the state. Yankee Energy also includes Yankee Energy Financial Services Company, which provides a full range of residential and commercial energy equipment financing options. Further information about YES can be obtained from its Web sites: www.yankeeenergy.com, www.yankeegas.com and www.yankeefinacialservices.com

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