Q: How will my bill be affected?
A: If the Illinois Commerce Commission (ICC) grants the full request, the increase would add approximately $4.60 per month – or $55 per year – to the average residential customer bill. These proposed new rates would still allow Nicor Gas to remain the lowest-cost provider among major natural gas utilities in the state, and among the lowest-cost providers in the nation. When calculated as a percent of the total monthly bill for the typical residential customer – including gas costs, taxes and delivery charges, this represents about 5% of the total.

Q: When would the proposed new rates go into effect?
A: The ICC has up to 11 months to review the proposal; and if approved, new rates would likely go into effect in the spring of 2009.

Q: Where will the change appear on my bill?
A: The increase would only apply to the Delivery Charges portion of your bill – the amount Nicor Gas charges to deliver the gas to homes and businesses. This portion typically accounts for between 15 to 20 percent of your overall annual bill.

The requested rate increase does not apply to the cost of the gas itself, which Nicor Gas purchases on the wholesale market and passes along to consumers without any mark-up. Natural Gas Costs typically account for between 75 to 80 percent and Taxes account for 5 to 10 percent of your overall annual bill.

Q: How will rate relief benefit customers?
A: Our number one priority is to deliver safe and reliable gas service to our customers, and we've done so for 54 years. Rate relief will ensure that Nicor Gas continues to provide the same level of service that our customers have come to depend on by allowing us to invest in our infrastructure and make operational efficiency improvements. Rate relief will be used for:

• System investments including new compressors for underground storage fields, which allow Nicor Gas to purchase less expensive natural gas for customers in the off-season and meet customer peak day delivery requirements during the winter.
• Replacement of older cast iron pipes with plastic or coated steel pipes that are more reliable and easier to maintain over time.
• Higher operating costs, such as the increased expense of providing employee benefits.
• Expansion of energy conservation efficiency initiatives that will help save customers money while protecting our environment.

Q: How will Nicor Gas expand its conservation and energy efficiency initiatives?
A: Nicor Gas is proposing a new Conservation Partnership Plan to encourage greater energy efficiency and conservation efforts by customers in partnership with Nicor Gas, which includes two components:

1. Currently, delivery and service fees are tied to the amount of gas a customer consumes. Under the proposed new rate mechanism, known as decoupling, the recovery of the company's costs – largely fixed in nature -- and the quantity of gas used by customers are unlinked. Decoupling aligns the interests of Nicor Gas with its customers by allowing the company to encourage and promote conservation and energy efficiency programs to help customers manage their bills. At the same time, it provides the company the opportunity to earn a fair rate of return on its system investments.
   
   With traditional rate structures, utilities are not incentivized to encourage conservation as company earnings rely on customer usage, but with a decoupling rate structure, utilities, customers and the environment will all benefit from energy conservation.
   
2. The second component of the Conservation Partnership Plan would establish a new conservation fund. This fund would be administered by an independent board and would invest in energy efficiency and conservation projects throughout Nicor Gas' service territory. These projects would encourage energy conservation and ultimately help customers manage their bills through decreased consumption.