The Cost of Natural Gas
The reasons for the steady increase in the price of natural gas are complex and extend far beyond the borders of Kansas. And the truth is, Kansas Gas Service has no control over the market price of natural gas.
Natural gas is a commodity and its price is constantly changing, reflecting current market conditions. It's important for us in Kansas to understand that the prices we pay are tied to the national demand and economy. That means factors such as weather (in the entire country, not just here) and the amount of natural gas in storage play a role in setting the market price.
Kansas Gas Service calculates what it paid to purchase gas for its customers and expresses this, without markup, on the bill as the cost of gas. The cost of gas fluctuates each month, with market conditions.
Purchasing Strategy
Kansas Gas Service has no control over the market price of natural gas, a but systematic approach to purchasing natural gas ensures that our customers have a reliable, secure supply at the most reasonable prices we can obtain. This includes:
- Securing contracts from diverse sources of supply through a competitive bidding process
- Using a combination of different practices, such as bidding and hedging – a financial tool that puts a cap on the price the company pays for its natural gas, helps protect customers from increases that may otherwise occur.
The per-Mcf charge for the fuel you use is an average of all of these contract prices and reflects what Kansas Gas Service actually pays for the gas. Kansas Gas Service makes no profit on the sale of natural gas. We earn our return through charges for service, and delivery and these rates are regulated by the Kansas Corporation Commission.