LIPA announced Thursday that it is cutting its rates by 3.2 percent due to a decline in fuel prices.

LIPA Chairman Kevin Law says the utility decided to pass the oil and natural gas savings onto customers. Law says oil and natural gas prices are expected to remain lower for 2009, but rates are protected through a hedging program should rates skyrocket in the near future.

?We are in a position to reduce our power supply charge and it will actually be the second-largest cut of the power supply charge in LIPA?s history,? Law says.

The reduction means customers will be paying about $5 less each month for a $154 electric bill. It cancels out a 3.2 percent rate hike LIPA saddled customers with in January. Law says the January increase was based on higher predicted gas prices, which have fallen unexpectedly. He says LIPA will monitor gas prices and possibly lower rates further if the price of gas continues to fall.

Former LILCO Executive Matthew Cordero says that?s unlikely though. He points out natural gas prices generally rise during the summer along with the price of oil.

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