Historically low natural gas prices are bad for the oil and gas industry. But for home owners, the economics of cheap gas have trickled down.
CenterPoint Energy announced that it’s cutting heating bills for its customers, worth more than 16 percent in savings for the average residential user.
In other words, an $85.25 January bill will be $71.11 in February, keeping $14.14 in your pocket.
“The price we pay to purchase natural gas has continued to drop in the last several months,” said Bruce Coogler, vice president of gas supply for CenterPoint Energy. “This is a good time to pass along savings to our customers since gas usage is typically higher at this time o year due to heating needs.”
Natural gas prices have fallen dramatically in the past several years, from more than $13 per million British thermal units to less than $2.50.
About 70-80 percent of each month’s heating bill is based on the price CenterPoint pays for the natural gas it distributes to residential and business customers, the company says. Each January and July, CenterPoint analyzes its natural gas costs and adjusts customers’ heating bills accordingly.
Law prevents CenterPoint and other utilities from profiting on commodity prices. They make their money from distribution and service fees, which make up the other 20-30 percent of CenterPoint customers’ bills.
Buying a programmable thermostat will increase those savings, but lower prices on my utilities will always make me smile.
More money for Specs!!!
Hmmm….I expect that the bill will be adjusted to include a “delivery charge” or some other phantom charge to exactly make up the difference. Does anyone actually know what all those fees, charges or other additions to your electric, landline/cellular and gas bill are? Yep, you’re right, only politicians and the utility outfits know. When we start exporting gas to China and the rest of the world, you will see how short lived your big reduction break lasts.
This is the biggest farce I’ve ever seen. Even AFTER the reduction, the gas price charges will still be about DOUBLE what the actual spot exchange price is, and has been for months. They keep claiming that they are only allowed to charge their actual cost for natural gas. Are we to believe that they have such crappy buying power with millions of customers that they pay twice the wholesale cost? Even allowing for expenses, it should be much lower. Natural gas is now around $2.50 per mcf, which is .25 per ccf, but they are charging like .63 per ccf now. How do they keep getting away with this? Nobody has ever been able to explain to me how their “actual cost with no markup” can be this high, when the price is published every day for the world to see. Which world are they living in?
Carrying Charges
It costs ATT – SWB approximately $2.50 to provide DSL service to your home. The DSL switch technology is quite primative dates back to the 1880s.
But Texas utility customers have to CARRY:
The LBO costs for SWBell to reassemble the ATT system.
The corporate wellfare Kings on the ATT Board of directors
The wellfare Queens who pay for nothing
Free 911 service for … everybody
Taxes, fees, assessments, paybacks and bribes
Cell phones and Cable are the same story
Carrying charges add up
Mo – The spot price for natural gas is about $2.50 per million British thermal units. That price is based on energy potential (British thermal units). CenterPoint is charging $0.54 per hundred cubic feet. That price is based on volume (cubic feet). You can’t compare the two without conversion.
SS,
Yeah, that ‘rithmatic was a real killer, back in the day.
But now it’t just plug-n-play
http://www.eia.gov/cneaf/electricity/2008forms/unitconv923.xls
File Format: Microsoft Excel – View as HTML
10, FOB Purchase Price to nearest 0.1 cent, cents per million Btu, 1, 0, 0, cents per … 8, Convert dollars per Mcf to cents per MMBtu, dollars per Mcf gas, 1020, 0 …
The reality is … the conversion is 1 = 1. Whilest we have ‘gone all the way’ in math and science. It is really not necessary for identities and non-conversion conversions.
Sometimes it requires a fancy adjustment of 6% if the natural gas is ‘rich’ or ‘lean’. But mostly the number is unity = 1.
So the SS either takes US for stupid, or IS stupid.
Stupid is as stupid does
Mo – I found out that 100 cubic feet equals about 102,500 British thermal units. According to that conversion, CenterPoint is now charging $5.27 customers per MMBtu. That is more than twice the Henry Hub spot price for natural gas. I emailed a CenterPoint spokeswoman about the discrepancy. She said the price CenterPoint charges also considers:
“monthly usage patterns of gas customers, expected market price of gas during each future month, cost of pipeline services, the cost of storage inventory, the cost of firm transportation and storage services on the delivering pipelines, the cost of compressor fuel, lost & unaccounted-for gas, and the over or under recovery of costs from previous billing periods. So simply looking at current spot market price postings for gas and expecting that to be the price to be billed during the current month is not a complete picture.”
typo correction:
CenterPoint is now charging customers $5.27 per MMBtu.
The extra fees are for pipeline capacity, storage, and peaking services to ensure deliverability at all times. The $2.50 premium over spot sounds about right. However, if you examine Centerpoint pricing history, you’ll find that this premium has been over $5.00 at times. These high prices were probably due to high cost gas in inventory, which begs the question, when and how much gas was bought and why? These gas purchases are where the RRC needs to look to provide real consumer protection.
Amazing that some people can complain about their gas bill going down. Don’t forget to complain when gas prices go up because the EPA wants to charge the utilities for the CO2 emitted from the power plants.
@oldcheme,
1. So what you’re saying is it is “about right” to DOUBLE your gross gas cost in order to account for the cost of doing business? That sounds fishy to me.
2. Your ending question is the key. It sure is “convenient” for the company who claims to charge their “exact cost with no markups”, and then is allowed to use a figure that THEY calculate and control, rather than the one published to the world in real time. Also, making those purchases at exactly the highest prices appears to favor self-dealing.
3. The last time the gas price was in the 2-2.50 $ range, the GCA charge was more in line with the spot price, perhaps within 20%, which is more like it if you ask me.
They want it both ways. They want to charge whatever they feel like charging, and then they want to claim it is a direct pass-thru. One or the other, please. If they would just cut out the “exact cost” nonsense and say the charge is “based” on market conditions, that would be more accurate and less problematic.
(cont)
It’s almost like the car dealer who claims to sell “below invoice”. They are playing with words to their benefit, making you think “invoice” has the same meaning as “cost”.