For most consumers, natural gas bills may as well be written in a foreign language. They contain a fistful of line items that add up to a total that is often painful to behold.

The information on your gas bill is arranged in three main sections, which each of the regional natural gas companies displays differently.

One section lists gas usage information, or how much gas was used during the billing period. Another section presents a usage history chart.

Then there is the section that shows the calculations that make up the current bill. This may be stated in summary form with a more detailed explanation on a separate page. It starts with the balance from your last bill, subtracts payments made, and arrives at the amount carried over to the current bill, if any.

The listing of new charges for the current billing period is where things can get confusing, because it typically includes five items:

1. Each company has a customer charge, a flat monthly charge to cover costs such as maintaining the gas lines, meter reading and billing.

2. A distribution charge, which covers the costs of getting the gas from the supplier to your home. (Dominion Peoples divides this into a "capacity charge" and a "delivery charge.")

3. The commodity charge, your utility's charge to you for the gas itself. (Columbia Gas calls this "gas supply"). This charge, together with the "gas cost adjustment," is established to comply with the state's mandate that gas companies neither make a profit nor take a loss on the gas itself.

4. Gas cost adjustment: More on this later.

5. State tax surcharge: this surcharge covers the taxes that the utility has paid to the commonwealth of Pennsylvania. If the utility overpaid, this will be a credit to customer accounts.

If your natural gas provider and your supplier are different, there may be an additional section on the bill detailing supplier charges.

Any special programs purchased from the provider, such as line-maintenance plans, will be listed separately as well.

Understanding the bill is just scratching the surface. There are plenty of other questions customers raise:

Q: How do the utilities set their prices?

A: The utilities set their prices by filing requests with the Public Utility Commission.

There are three types of filings. Picture them as layers of a cake. The respective sizes of the layers reflect the amount of time that each filing is in effect.

The bottom layer of the cake is the base rate filing. This covers the utilities' operating expenses, such as payroll and building or maintaining pipelines. This is also where the companies derive their profits. The PUC limits those profits to "a reasonable rate of return," which is typically between 7 percent and 11 percent.

The base rate does not appear on a customer's bill, but it includes two items that do appear -- the customer charge and the distribution charge.

A utility's base rate typically remains unchanged for years, if not decades. Dominion Peoples' last base rate filing was in 1995. When Columbia Gas filed a request for a new base rate in January 2008 to cover the cost of a 20-year pipeline replacement project, it was their first such filing since 1996. The new base rate went into effect Oct. 28. Equitable Gas filed a base rate request in June, and expects approval by the end of March. Its current base rate has been in place since 1997.

That brings us to the top two layers of the cake. The middle layer is called a 1307-f filing. In this filing, the company estimates what its average cost for gas will be for the next year, and how much customers will use.

The company then calculates any discrepancy between what it paid for gas the previous year and what it collected from customers during that year. If the customers paid more than the company did for gas, the overage is subtracted from charges in the coming year. If customers had paid less than the company, the shortfall amount is added to what the company will charge in the coming year.

These calculations are behind two of the charges that appear on a bill: the commodity charge and the gas cost adjustment.

A 1307-f filing is effective for one year. Utilities across the state submit their filings on a staggered schedule; all three local utilities submit theirs in April, declaring a gas cost adjustment rate to be effective the following October.

The top layer of the cake is a quarterly filing that further refines the 1307-f numbers. Again, the utilities compare what they have paid for gas with what they have charged customers and adjust their rates going forward. This filing yields the figures that actually show up on your bill for the commodity charge and the gas cost adjustment, effective each Jan. 1, April 1, July 1 and Oct. 1.

Q: Why doesn't the commodity charge on my bill match the prices that I see for natural gas on the NYMEX?

A: Utilities buy their gas in different ways. They buy some of it on a daily basis, paying spot prices. They buy some of it by using contracts to hedge against future price increases. They buy some of it from local producers, and they buy some of it from the Gulf Coast. All of those factors make the costs highly variable.

Even when they buy on the NYMEX, their costs include more than the NYMEX price.

"NYMEX rates are priced for gas at the Henry Hub in Louisiana," said Equitable spokesman Dave Spigelmyer. "The cost to move gas to Equitable's city gate (the point at which Equitable takes delivery) must be included in our gas costs rate."

In addition, the commodity charge includes an estimate for natural gas withdrawn from storage at an average price when the gas was purchased, typically between April and October.

Finally, because the rate is adjusted quarterly, price changes within a quarter will not be reflected. The commodity charge on your current gas bill was set Jan. 1, and will remain the same until March 1, regardless of what happens with wholesale prices this month or next.

Q: Why should the price that they paid for gas last summer have anything to do with the price I pay for gas now?

A: Because the utilities buy a very large chunk of their gas during that April-October period, which they call the "net injection season," and put it into storage for use in the winter.

Gas is typically cheaper during that time than during the winter, so the more they buy then, the lower the overall cost. This helps them to comply with a provision of state law that requires them to pursue a "least-cost procurement strategy" when buying gas.

Q: Is the PUC the only agency keeping an eye on the companies?

A: Far from it. A utility's 1307-f filing, for instance, is "typically a contested proceeding," said PUC spokeswoman Jennifer Kocher, meaning that someone usually steps forward to challenge the numbers.

Several someones, in fact, including the Office of Trial Staff, an independent office within the PUC; the state Office of Consumer Advocate, which resides in the Attorney General's office; and the Department of Community and Economic Development's Office of Small Business Advocate.

"There's ample opportunity for all sides to present evidence to ensure that there's been no overcollections or undercollections and to ensure that the least-cost procurement strategy is being followed," she said.

"If they're not following least-cost purchasing practices, we make adjustments to what they're able to claim," she said.

For instance, if a utility's total cost for gas was $3 per thousand cubic feet (mcf), and it was found to have charged customers $4, the agency will order a rebate of sorts, in the form of reduced prices. The commission will tell the utility, "Now you're paying $3 for gas, but you're allowed to charge customers $2."

Q: How can I eliminate the wild swings in my natural gas bill?

A: The simplest way is by signing on to your utility's budget plan.

When a person signs up as a budget plan customer, the utility takes a look at gas usage for the past year, then divides by 12 to come up with a monthly payment to spread the cost of that customer's bill over 12 months.

For the budget customer, the top layer of the cake is not a rate that is adjusted every three months; it is a monthly payment that is adjusted at irregular intervals depending on the utility.

Customers of all three utilities can switch to budget billing at any time, as long as their accounts are current.

Q: Is there an alternative to the budget plan?

A: You also can level out your monthly bill by signing a long-term contract with a competitive natural gas supplier.

By default, your natural gas utility -- the company that delivers natural gas to your home -- also supplies that gas. But you can choose to have another company as your supplier, an option that became available with the passage of the state's Natural Gas Choice and Competition Act in 1999.

Competitive suppliers, as they are called, offer contracts for a one- or two-year period at a fixed price. For customers who do this, the top two sections of the pyramid disappear, being replaced by the supplier's price.

The local utility, whether that is Dominion Peoples, Equitable or Columbia, still provides service, so the utility's customer charge, distribution charge and state tax adjustment surcharge still apply. But the utility's gas pricing will be replaced by the competitive supplier's price -- a price that is not regulated by the PUC.

Q: How do competitive suppliers set their prices?

A: As most companies do, by calculating costs and building a profit margin into their prices.

"Marketers and utilities basically have exactly the same costs," said Jeff Mayer, president and chief executive officer of Stamford, Conn.-based MXenergy, one of our area's competitive suppliers. But because their primary products are long-term contracts, companies like MXenergy must make greater use of financial instruments such as futures contracts, swap contracts and options to make sure that they have the gas they need to meet future obligations to their customers.

"We have to include the cost of financing" when setting prices, Mr. Mayer said. "This is a capital-intensive business."

Q: Is now a good time to switch suppliers?

A: Not if you want immediate savings.

The state's Office of Consumer Advocate presents charts on its Web site (www.oca.state.pa.us/Industry/Natural_Gas/gascomp/GasGuides.htm) that compare the utilities' prices with those offered by competitive suppliers.

According to the charts, a Columbia Gas customer using 100 ccf per month at Columbia's "price to compare" will pay $88.30 for their gas supply; the lowest cost by a competitive supplier would be $89.90, and the highest, $119.90.

Dominion Peoples' supply charge for using 10 Mcf would be $75.40; the lowest competitor cost would be $99.90; the highest, $106.90

For Equitable Gas, the price to compare yields a monthly charge of $112.10 to supply 10 Mcf; Equitable's only competitive supplier, Dominion Peoples Plus, would charge $119.90.

But Mr. Mayer said that any comparison of utility pricing with competitive supplier pricing is "apples to oranges," because with a competitive supplier, you're not simply buying gas, you're buying price protection.

While natural gas prices are low now, the last few years have demonstrated that what goes down must come up. Or as Mr. Mayer put it, "Energy is the most volatile commodity in the world."

In October 2005, the PUC submitted a report to the state legislature stating that there is "no effective competition" in Pennsylvania's retail natural gas market. In September of last year, it approved an action plan to create more competition. The plan is to be completed in two years.