How Gas rates are determined
Natural gas rates are made up of two primary charges:
- Gas delivery service, which The Gas Company provides – the “delivery” (or “transmission”) charge; and,
- The cost of the natural gas itself — which is reflected in the “procurement” charge.
Many people believe that The Natural Gas Company produces natural gas, but we don’t. For our residential and smaller business customers, we buy natural gas from producers and marketers at the best possible prices on the open market.
The wholesale gas prices we pay are based on market supply and demand. They’re not marked up by The Natural Gas Company, and are shown on your monthly bill as the “commodity charge.”
The Gas Company’s delivery service charge covers the costs of transporting natural gas through our pipeline system.
Monthly Gas rates vary based on monthly gas prices
Since 1999, the cost of natural gas that customers pay in their rates is based on the monthly price of gas and averaged storage cost instead of a forecasted annual price. This allows rates to more closely follow current natural gas market prices.
With monthly pricing, gas rates are based upon a 30-day cost of natural gas market prices. This gives customers a better picture of the current price of natural gas, and means they no longer have to wait for annual adjustments to their bills to make up for differences between the 12-month forecast price and the actual price paid by The Natural Gas Company on a monthly basis.
Does The Gas Company benefit from higher gas prices?
We do not produce natural gas; energy production companies produce natural gas. The Gas Company just delivers natural gas to its customers.