Understanding natural gas prices
By Dan McVey, Vice President & Chief Operating Officer — Gas Operations
Dan McVey
February Cold Snap Impacts Prices
The U.S. Energy Information Administration (EIA) predicts natural gas prices will continue to increase during the 2021-22 heating season. While we work hard to keep our natural gas and propane rates low, the price we pay to purchase energy is beyond our control. The uptick in natural gas prices can be attributed to two main factors: natural gas exports and electric generation.
The February 2021 cold snap that affected much of the central part of the country, especially Texas, reduced supply and increased demand for natural gas. This resulted in nearrecord storage withdrawals and natural gas prices continued to climb. Although prices did not remain elevated, the February cold snap raised the annual 2021 average price for natural gas.
Understanding Your Natural Gas Bill The Energy Cooperative continually evaluates its cost to serve our members. These costs fluctuate depending on the amount of energy used and the cost of the commodity, transmission, storage and delivery to the home or business.
The United States started exporting natural gas in the early 2000s. Those numbers started to skyrocket in the past few years and now outpace imports. Your natural gas bills include the following charges: • Facilities Fee of $23.00 per month • Infrastructure Replacement Rider of $5.49 per month • Distribution Rate of $0.211 per ccf • Gas Cost Recovery (GCR) Rate of $0.595 per ccf and changes monthly based on the price we pay to purchase your natural gas (this is where volatile gas prices are most evident) If you have questions about your natural gas bill, contact a member service representative at 1-800-255-6815 or visit myenergycoop.com.
In addition to exporting natural gas at record levels, extremely hot weather creates a demand for natural gas-powered electric generation facilities. When electricity is in ‘peak demand’ natural gas fired power plants are brought online to meet the high energy use. Many of these plants do not run all the time. Instead, they are on standby for those times when everyone is using more electricity. With the extreme heat we experienced this summer, natural gas consumption for electric power generation increased. This leaves less natural gas supply to store for use during winter months. This removal of natural gas from the supply chain results in higher prices.
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