Today’s Natural Gas Prices…And Where You Can Get Help
While natural gas prices have decreased over the past few months, UGI Penn Natural Gas understands that customers may still be concerned about fluctuating energy costs and how they may impact winter heating bills. Unlike last year, when natural gas prices doubled in the summer and escalated again after hurricanes Katrina and Rita, this year UGI-PNG is pleased to have been able to lower its gas cost four times. Those lowered gas costs were passed directly on to you—our valued customers.
However, it’s important to remember that weather, supply and demand, and wholesale market conditions are what influence natural gas costs. To gain a better understanding of natural gas costs and how they affect your heating bill, please feel free to check out the following Q&As specifically designed to answer common questions from customers and to inform you of where you can go for help.
Q. Years ago, my gas bill was much cheaper. What’s going on with natural gas prices?
Natural gas remains a clean, safe and cost-efficient source of energy. However, natural gas production reportedly has not kept pace with rising demand, and the wholesale market price of natural gas is driven by supply and demand.
Looking back on the summer of 2005, natural gas prices had nearly doubled. In the fall, hurricanes Katrina and Rita swept through the Gulf Coast and affected oil and natural-gas processing facilities, further straining natural gas supplies and forcing another spike in prices. Those high prices were reflected in consumer energy bills nationwide.
This year, we’ve been fortunate to have had a summer that was largely free of extreme heat (natural gas is used to generate electricity) and a hurricane season with no major storms or devastation. While these conditions led to a steady increase in natural gas inventories and lowered gas costs, UGI-PNG was then able to decrease its gas cost and pass along those savings on to its 158,000 customers.
Q. So what kind of bills can I expect this winter?
As stated previously, falling wholesale market prices for natural gas have allowed us to lower our gas cost four times this year. Right now our cost is at $.98 per ccf (per hundred cubic feet); last year at this time we were at $1.21 per ccf. This means that for the average residential customer using 104 ccf a month, the average monthly bill will go from $160.79 a month to $141.26 a month.
While we are encouraged by the recent drop in prices, which should prove beneficial to our customers, it is also important to point out that those lowered prices were mixed in with the higher prices we had to pay earlier in the year. Utilities have storage filling schedules that must be met and are required by state regulations to have enough natural gas stored so that it can meet the heating needs of its customers during the winter. UGI-PNG started buying its winter supplies of natural gas as early as the spring –at a time when natural gas prices were higher than they are now. It is those higher costs that will be reflected in the retail price this winter, when the gas is being consumed.
And again, while UGI-PNG sees the falling prices as encouraging, we caution customers that weather—such as an extremely cold winter—and wholesale market conditions can once again force a spike in natural gas costs.
Q. But doesn’t UGI Penn Natural Gas make more money when it’s really cold out and our gas bills are high?
Yes and no. First of all, what you pay for natural gas is exactly what we pay for natural gas. There is no markup on our costs for natural gas. While UGI Penn Natural Gas tries to provide the lowest-cost gas service possible, the wholesale market, specifically the commodities market on the New York Mercantile Exchange, determines the price that all natural gas distribution companies pay for natural gas supplies. We earn no profit on this part of natural gas service, which accounts for roughly 70 percent or more of your overall natural gas bill.
UGI-PNG earns its income from delivering natural gas. While a colder than normal winter will boost consumption and consequently the distribution of natural gas, UGI-PNG’s revenue is subject to increase. For example, say you ordered a sweater online. Fed Ex delivers the sweater to your home. Fed Ex made no money on the cost of that sweater but did make money on the cost to deliver it. Or…say you ordered five sweaters. Again, Fed Ex made no money on those sweaters but it did make more money on the delivery because of the increase in freight.
While UGI-PNG earns its income from the delivery of natural gas, that income could be offset by expenses associated with maintaining our system and serving customers. And, an extremely cold winter could affect some customers’ ability to pay their bills, which also impacts our revenue.
Q. I’m currently looking for a new home. I always thought natural gas was the best buy. Should I be considering a home with electric or oil heat rather than natural gas?
Energy prices in general have climbed. Today’s prices at the gas pumps are constant reminders of that. As stated previously, natural gas is a great home-heating buy for the winter. At this point, no energy source is immune to rising costs.
In addition to the economic value, natural gas is also efficient, clean and reliable.
Q. Is there any way we can do something at home to lower our heating bills?
One way is to conserve energy. Most people don’t realize it, but the average household uses 22 percent less than energy than it did in 1980–thanks to tighter home construction, more efficient appliances and a shift toward home-building in warmer climates. Did you know that reducing air leaks with caulking or weather stripping can cut as much as 10 percent from an average household’s monthly energy bill? Of course there are a number of energy conservation steps that can help reduce the amount of energy you use – these tips can be found at the Energy Conservation section of our Web site. Households using energy-efficiency products may also be eligible for tax credits under the Energy Policy Act (visit www.energy.gov). In addition, ensuring your home is well-insulated and your heating equipment is working properly before the winter heating season begins will also help you conserve energy and save money.
Preventative maintenance and cleaning on even a fairly efficient furnace can help you save money. Contact a qualified home heating contractor or schedule an appointment with UGI Penn Natural Gas. For the low cost of $79.95, UGI-PNG will inspect and clean your furnace. We also offer a full-year repair and maintenance program called CustomCare that will cost you only pennies a day. For more information on these services, contact UGI-PNG at 1-800-432-8017.
Q. Where can I get payment help?
For help in paying heating bills, UGI Penn Natural Gas offers a Budget Payment Plan, which helps you pay a more predictable amount each month, rather than steeper costs in the winter. If you find it difficult to manage heating bills in the winter, you may want to look into this free service that helps you spread out equal payments, interest free.
We also offer and promote a number of other assistance programs, including:
For more information, customers should contact UGI-PNG at 1-888-829-8611 or visit the Residential Services, Bill Payment section of our Web site.