Natural gas customers in Indiana may be seeing a 5% reduction intheir heating bills this winter, courtesy of a proposed taxexemption by Gov. Frank O’Bannon. O’Bannon said last week that hemay suspend the state sales tax of o5% on natural gas, similar to aban he enacted on gasoline sales in June.

“We are, and have been in the last two weeks, discussing thenews that price hikes could be dramatic,” said O’Bannon ‘sspokeswoman Cheryl Reed.

Faced with skyrocketing natural gas prices this spring andsummer, Indiana’s utilities have asked state regulators forpermission to pass along the price hikes to consumers. Forinstance, Citizens Gas & Coke Utility estimates that for itscustomers, a bill could go $30 a month higher — if the Midwestwinter is a mild one. State law now permits gas distributionsuppliers to pass along their natural gas purchasing costs toconsumers. Citizens said that the immediate cost increase is about25%, which would make a $105 natural gas bill jump to about $130.

O’Bannon suspended the sales tax on the price of gasoline onJune 26 under a never before used 1981 law that granted the stategovernor the authority to suspend the sales tax on energy during acrisis. O’Bannon said the high prices at the pump were just such acrisis, and when he suspended the sales tax, it cut pump pricesbetween 7 and 11 cents per gallon. Market factors also contributedto lowering the price after that. The initial 60-day suspension hasalready cost the state more than $22 million in tax revenue.

Now, O’Bannon aides are researching whether “energy” in the 1981law also refers to natural gas.

Coincidentally, O’Bannon is up for re-election this year, andsources say that if O’Bannon suspends the natural gas tax, it mayoccur during his re-election bid this fall.

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