Natural gas prices stable, suppliers say

Monday, Jan. 27, 2014 2:26 PM
Last updated 2:40 PM
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Despite a winter in which Augusta’s temperature reached a new record low and area residents heated their homes more often than in the past year, natural gas providers say prices remain relatively stable.

That is for now at least.

“Still no changes in the marketplace,” said Randy Lewis, spokesman for Georgia Natural Gas, which has roughly 30,000 customers in the Augusta area.

Lewis said Georgia Natural Gas has not seen any recent increase in late bills or requests for payment arrangements, and that prices are “still relatively low compared to historical prices from several years ago.”

He added, though, that the billing cycle for the last deep cold – the “polar vortex,” as it has been dubbed – has not gone out to customers yet.

About half of all households nationwide use natural gas as their primary heating source, and the U.S. Energy Information Administration projected in November that those residents will spend an average of $80 more this winter than last because of possible changes in weather patterns, fuel production and pipeline capacity.

The surge represented a cost increase of 13 percent and may not be far from inaccurate, according to recent data.

Demand levels in the Southeast have spiked this winter, with days in which outside temperatures drop to the point buildings require heat increasing 40 percent from 59 days last year compared to 142 this year, according to the National Oceanic and Atmospheric Administration.

Augusta set a new record low Jan. 7 when temperatures dropped to 12 degrees, and another blast of cold air, and possibly snow, is forecasted Tuesday.

As a result, the Energy Information Administration reported last week that total natural gas consumption has increased 19 percent, largely in the residential and commercial sectors.

The rise in demand has February’s advanced delivery of natural gas up as much as 5 percent to more than $5 per million thermal units on the New York Mercantile Exchange. The contract jumped 20 percent last week, the most since October 2010.

“We have seen some upward movement in the commodity price of natural gas, however in our state’s deregulated natural gas market, we have fixed rate plans that protect against price spikes,” said Simone McKinney, spokeswoman for SCANA Energy, which in Georgia has 460,000 customers. “The majority of our customers are on fixed rate plans and if they’re locked in through the winter, they won’t be impacted by any price increases. Our variable customers have rates that are in effect until Feb. 5.”

Because of the warm start and a wholesale price that has been declining for much of the past decade, Lewis said at the beginning of the season, it appears prices will be relatively stable this year.

During the early 2000s, he said, the Georgia provider saw natural gas, which is bought in blocks known as dekatherms, trade on the wholesale market for $13 to $15 per unit.

In November, units were going for $3.25 a block, which Lewis said was translating to homeowner contracts that are as low as 52 cents per therm, compared to $1.80 in 2006.


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