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East Ohio customers likely to pay less, despite higher gas prices
YOUNGSTOWN
Despite higher natural-gas prices this December, Dominion East Ohio customers can expect to pay 10 percent less in monthly residential bills than they did a year ago.
With a colder-than-normal winter expected, customers likely will be turning up the thermostat more than they did last year, and increased use in the frigid winter months is causing natural-gas prices to rise about 2.8 percent from last December, said Neil Durbin, senior communications specialist for Dominion East Ohio.
“Generally, natural gas is a very weather-sensitive business,” Durbin said.
“In the natural-gas business, when we talk about the weather, we are not just making small talk,” Durbin said.
The natural-gas prices are based on the national market, which is seeing some upward pressure from electrical-generation companies switching from coal to natural gas.
Sandra James, director of corporate communications for National Fuel, said the industry looks to the Henry Hub Gulf Coast natural-gas spot price to gauge the market price for natural gas, measured in dollars per million BTUs, or British thermal units.
That price is converted to dollars per thousand cubic feet (mcf) to determine how much customers will pay to heat their homes.
Natural-gas prices peaked in 2008, with the national average nearly reaching $13.40 per mcf.
But that was before shale drilling took off, making the commodity more available. Since then, natural-gas prices have trended downward, though there is fluctuation from month to month.
Dominion expects increasing domestic production of natural gas in Ohio, Pennsylvania and West Virginia to moderate gas prices in Northeast Ohio this winter.
As of Dec. 6, the Henry Hub spotted natural-gas prices at $4.15 per million BTU, which converts to $4.25 per mcf.
Dominion East Ohio set its December rate at $4.42 per mcf, accounting for costs of transportation and other services.
The company projects that customers will see natural-gas prices in the range of $4 to $5 per mcf during the winter heating season.
Though that price is higher than last year, customers can expect their bills to be about 10 percent cheaper than they were last December.
The reason, Durbin said, is lower user-based charges, or riders, that are attached to the gas bill.
Last December, riders totaled about $1.18 per mcf. This year, that cost is down to only about 30 cents per mcf.
One such rider recovers the cost of the Percentage of Income Payment Plan, a state-mandated charge that funds a program aimed at making heat more affordable for low-income families.
PIPP was less expensive than anticipated in 2012 because of a less-severe winter and lower gas prices. So, while Dominion customers last December paid a 44-cent fee for each thousand cubic feet of gas, they are receiving a credit of 22 cents on the PIPP rider this year.
“That’s about a 40-cent swing,” Durbin said.
The decreased cost of riders will help to lower projected natural-gas bills in December by $11.52, to $103.44, for the average residential customer, though that price will vary depending on use.