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CARROLLTON UTILITIES NEWS

Natural Gas Prices Winter 2008-2009

Recent increases in natural gas costs means consumers are likely to pay substantially more for home heating this winter compared to last year. There are still about five or six months left before the winter heating starts, which means prices have time to drop. However, if today’s prices are any indication of this winter, consumers will really feel the pinch when heating bills arrive given the strain many consumers already face with higher gasoline and food prices. “We hope the news is better come November 1 (which is generally viewed as the start of the winter season in the natural gas industry) but right now we are bracing for the worst,” said Ron McMillan Chairman of Carrollton Utilities Commission. “Carrollton Utilities doesn’t profit at all from higher gas prices," McMillan said. Conditions that could lead to lower prices would include a cooler than normal summer, a mild hurricane season, and a delay in the start of cold temperature come November. These conditions would tend to put negative pressure on natural gas prices. High summer temperatures mean more natural gas is being consumed for generation of electricity to power air conditioners. Hurricanes can wreck havoc with the large natural gas reserves in the Gulf of Mexico.

WHAT ISSUES AFFECT NATURAL GAS COST?

Natural Gas Demand Issues:

The benefits of natural gas have long made it the fuel of choice”for residential space heating, as well as for commercial and industrial processing.
Industrial consumption is currently increasing and projections indicate continued growth, although higher prices may limit or stall growth in this sector.
Over the past five years natural gas has become the primary fuel for new electric generation facilities. Railroad transportation issues in the western U.S. have limited coal deliveries resulting in additional natural gas requirements as well.

Natural Gas Supply Issues:

Hurricane activity in 2005 had a tremendous impact on natural gas supply and prices. Each year these storms have the ability to disrupt supplies and have dramatic impact on prices.
Natural gas suppliers imported from Canada into the U.S. are decreasing year on year. Natural gas production in Canada is tracking activity in the U.S.
The import of liquefied natural gas (LNG), while increasing, is not at a level to fully replace diminishing supplies from U.S. and Canadian production.

Other Factors:

Natural gas is influenced by oil prices as various industrial and electric generating facilities can utilize natural gas or fuel oil. Oil prices are significantly above historical averages and so long as oil prices stay high, natural gas prices are likely to tract.
Since natural gas is a commodity traded on NYMEX, price fluctuations will naturally occur. In addition to supply and demand factors, the natural gas trader's market perception can have a large influence upon market pricing. There is significant uncertainty in the future market relating to oil and natural gas and higher prices are reflective of this position.

Please understand we are making every effort to keep costs down by employing a hedging program and forward pricing on storage along with our economies of scale purchasing through the Public Energy Authority of Kentucky. We appreciate your understanding and continued patronage during these challenging times. Natural gas and crude oil are very volatile commodities. The prices quoted in this article change daily. For current pricing information, please call our office.

Anatomy of a Natural Gas Rate

The natural gas rate local customers pay is made up of three components:

	1.	The cost of the natural gas commodity itself;
	2.	The cost to transport the gas from where it is produced (primarily from the Gulf of Mexico, Texas and Louisiana) to the city utility; and
	3.	The cost to transport the gas from the city gate to the customer's home.

The cost to transport the gas to the home is a regulated (by local government) fixed cost based on consumption. The cost to transport the gas interstate to the city is also a regulated (by the Federal Energy Regulatory Commission) fixed cost; however, the natural gas commodity price fluctuates with the market as it reacts to weather and supply and demand issues. It is this component, which can swing wildly, that results in dramatic price changes. Fortunately, this component has decreased from last winter.

What can consumers do?

For those that implemented our energy savings suggestions, you have already benefited for a year and should continue your conservation efforts again this year. We strongly suggest continued energy conservation this winter. If you would like a copy of our energy conservation suggestions, please stop by the Carrollton Utilities office at 225 Sixth Street.. Please see HELPFUL HINTS page for additional conservation tips. There is no better time than now to weatherize your home.

Carrollton Utilities Wins EPA Drinking Water Excellence Award

(click on photo to enlarge)

Carrollton Utilities has won the U.S. Environmental Protection Agency’s (USEPA), Region 4 2005 Safe Drinking Water Act Excellence Award for the Medium Ground Water Public Water Supply. Carrollton Utilities was one of only two water systems in the state awarded this honor.

The Drinking Water Act Excellence Awards program is intended to highlight effective operation and maintenance programs. The award also honors the commitment of the water systems’ leadership and plant personnel in maintaining and protecting drinking water and public water supplies.

Carrollton Utilities was urged to submit for the award by one of its customers, Dow Corning. CU is grateful that our customers feel that the system is worthy of honoring and grateful to the USEPA for selecting the system. We strive to provide safe drinking water by our commitment to compliance with the Safe Drinking Water Act and through our operations and maintenance programs. The awards process included reviewing Carrollton Utilities quality of water produced, facility operation and maintenance, administrative management and customer service.

CITY OF CARROLLTON WINS SPIRIT OF KENTUCKY AWARD

FRANKFORT, KY (August 5, 2008) – Today at the 33^rd annual Governor’s Local Issues Conference held in Louisville, the City of Carrollton was awarded the 2008 Commissioner’s Spirit of Kentucky Award for its role in developing the Gallatin, Carroll, Henry and Owen County Regional Wastewater System. The award is given to the sponsors of a public project that demonstrates cost effective coordination of government resources among multiple government entities.

The Regional Wastewater System was developed as a comprehensive means to eliminate the need for multiple smaller treatment plants and their operating and maintenance costs. Wastewater is collected from surrounding cities, counties and the Kentucky Speedway and transported to the City of Carrollton. The project reduces environmental degradation while addressing the anticipated growth in the area, especially around the Kentucky Speedway.

“We had many valuable, resourceful projects from across the state nominated for the award this year but we felt that the City of Carrollton’s Regional Wastewater System was the best example of a collaborative public service effort,” said Department for Local Government (DLG) Commissioner Tony Wilder. “Through the cooperation of seven municipalities in four counties, a more efficient way to treat wastewater while reducing costs and benefiting the environment was achieved. We are pleased to recognize their innovation and teamwork.”

Nominations for the Spirit of Kentucky Award were submitted to DLG for consideration. Projects eligible for nomination include those of government, public service, private non-profit or quasi-governmental groups or agencies. The award is given annually at the Governor’s Local Issues Conference.

OWENTON NATURAL GAS PROJECT

The City of Owenton and Carrollton Utilities through joint cooperation have brought natural gas service to Owen County. Prior to the project, Owen County was one of the few counties in the Commonwealth without natural gas service. The $5.3 million project was completed in July 2007 and is now ready to provide service to Actaris, Owen County Industrial Park and the many residents along the pipeline route. The 6-inch steel pipeline starts near the Steel Technologies facility on US 42 in Gallatin County and continues as follows:

north along US 42 to Kentucky 1039
south along Kentucky 1039 to the I-71 corridor and Sparta
east along Kentucky Speedway Boulevard to KY 35
south along KY 35 through Sparta and into Owen County
south along US 127 to the Owenton City limits.

Phase II of the project will consist of a pipeline through Owenton along US 127 to the east city limits. Phase II design is currently underway.

CARROLLTON REGIONAL WASTEWATER TREATMENT PLANT

The new regional wastewater treatment plant went on line in September 2006. The plant replaces a treatment plant that served the City of Carrollton from its location on Second Street since 1960. Flooding concerns and more stringent treatment standards made the Second Street location no longer viable. The new regional treatment plant performance has been excellent from day one and will meet the needs of Carrollton for many years to come.

HAPPY HOLLOW SEWER EXTENSION PROJECT

The $1.5 million sewer project known as our “Happy Hollow Project” is nearing completion. Most homeowners have already connected to the sewer system in order to take advantage of the reduced connection fee that expires 120 days after the sewer becomes available. The project provides public sewer service to Happy Hollow, Woodlawn Estates, Old Highway 227, Lloyd Lane, Boone Road and Park Acres. The project was made possible by two grants from the Kentucky Legislature, contributions from the Carroll County Fiscal Court and a low interest loan from the Kentucky Infrastructure Authority.

CAMPBELLSBURG SEWER EXTENSION

The City of Campbellsburg has completed the sewer line connecting the city’s sewer system to the new Carrollton Regional Treatment Plant in Green’s Bottom. This project will allow Campbellsburg and Henry County much needed wastewater treatment capacity for anticipated industrial, commercial and residential growth.

BEST TASTING WATER FOUND IN CLAY, CARROLL AND MARSHALL COUNTIES!

Judges at Kentucky Rural Water Association’s 13^th Annual Management Conference, held in Bowling Green, Kentucky, have found the best tasting water in Clay, Carroll, and Marshall counties. On February 13, 2008, Carrollton Utilities was a close second place in a statewide competition to identify the tastiest water in the state. First, second and third place winners were Manchester Water & Sewer, Carrollton Utilities, and North Marshall Water District, respectively.

Water districts, water associations, and municipal utilities from around Kentucky were eligible to submit samples of their water, straight from the tap. This year’s conference, attended by over 300 participants, provided navigational tools for those in the water and wastewater business to utilize when “Mapping their Route to Success.” Representatives from the private sector, related industries, and from water and wastewater service providers offered an excellent blueprint for success. Industry professionals demonstrated the best and latest in supplies, materials, and services appropriate for utilities’ needs.

As part of the Quality on Tap! campaign to emphasize the high quality, standard, and consequently, taste of America’s public drinking water, Kentucky has a great chance of winning a national competition on Capitol Hill in Washington, D.C. April 20 – 22, 2008, during the Rural Water Rally, an annual legislative event for the 48 state affiliates of the National Rural Water Association.

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