The news is slightly better for the short-term: natural gas customers can expect lower natural gas bills for October, based on gas rates posted by Cinergy Corp. Tuesday.

Cinergy, which has about 380,000 natural gas customers, said the typical Southwest Ohio consumer using 10,800 cubic feet of gas can expect a monthly bill of $104.59 starting Friday, down from $109.83 last October and $107.75 this month.

Its Northern Kentucky consumer can expect to pay $104.46 starting Friday, down from $106.91 a year ago and $111.20 this month.

Cinergy is required by law to pass through the cost of gas it buys on a dollar-for-dollar basis, with adjustments for over or under collections in prior periods.

HEATING HELP

Web sites that offer advice on reducing natural gas costs include: • www.cinergy.com • www.puc.state.oh.us • www.energy.ky.gov. • www.pickocc.org

While the new rates are good news for consumers, the bad news is the winter heating season has not started yet.

The Kentucky Public Service Commission said Tuesday it expects natural gas prices across the commonwealth this winter will rise 10 percent to 15 percent, assuming normal winter weather.

That is consistent with a national forecast published earlier this month by the federal Energy Information Administration projecting natural gas home heating costs in the Midwest will rise 17 percent this winter compared to the same time last year.

The unit of the Department of Energy won't issue its formal winter forecast for a couple weeks. But it said while natural gas prices have declined in recent weeks, the average natural gas household heating expenditures in the Midwest could rise to a total of $1,010 for this winter from $863 last winter.

That overall forecast is based on natural gas prices rising 7.5 percent from an average of $9.77 per thousand cubic feet to $10.50 per thousand cubic feet.

Cinergy, which adjusts its gas costs monthly, has historically been well below the national rates and is one of the lowest-cost suppliers in the Midwest.

Cinergy doesn't forecast winter gas prices.

"We believe prices will be in the same range as last year," said spokesman Steve Brash. But he said cold weather and greater industrial consumption could shrink supplies, driving up demand.

Alan Schriber, chairman of the Public Utilities Commission of Ohio, said while gas rates will rise this winter, "I don't think they will get to levels that will cause alarm."

He said the state's utilities have helped mitigate higher costs by buying gas ahead and hedging future prices.

Rick Curnutte, president of Volunteer Energy Services in Columbus, an independent gas supplier to businesses, said gas prices are up generally because of speculation over the impact of the hurricanes on gas supplies from the Gulf of Mexico. But, he said, some analysts say gas prices could decline this winter if the weather remains mild.

A veteran of 20 years in the wholesale gas industry, Curnutte said the business "has always been volatile."

What's driving gas prices higher? The demand has increased while supplies haven't increased as fast, say experts.

"It's sort of a classic case study in supply-demand economics," said Andrew Melnykovych, spokesman for the Kentucky PSC.

"When you get into these tight balances between supply and demand, it not only tends to have an upward pressure on prices but it also increases the volatility of prices," he said.

"It takes incrementally smaller events to create large fluctuations in price."

The Washington, D.C.-based Natural Gas Supply Association, a trade group, is slated to make its winter heating season forecast on Thursday. The federal EIA says natural gas put in storage for winter is about 7 percent ahead of last year.

Melnykovych points out that summer gas in storage represents about half the fuel consumed in the winter heating season.

But that summer gas costs about twice what it did three or four years ago.

Weather remains the key to natural gas costs. If the winter is mild, gas price increases could be relatively small. But if the winter is particularly cold, that will draw down gas in storage and push consumer prices higher.

In its outlook for winter, the National Weather Service is predicting near-normal temperatures and below-normal precipitation in Kentucky.

But as Melnykovych points out, it's not just local weather that has an impact on gas prices.

In the spring of 2002 natural gas prices spiked not because of cold weather in the Midwest but because of cold weather in the Northeast.

"The same pipelines that serve us serve New England," he said. "Anything that changes the price of the gas moving in those pipelines, even if it isn't in our vicinity, it's going to have an impact on us."

E-mail mboyer@enquirer.com