Due to increased usage as the weather grows colder, your natural gas bill will likely be higher than previous months. But it’s not only the weather - the cost of gas is nearly double what it was at this time last year. Several factors impacting the natural gas market have resulted in higher costs for natural gas compared to a year ago.
Combined with the higher natural gas prices set by the open market, colder weather months result in increased usage to heat homes. Reducing the amount of natural gas you use in your home can result in a lower monthly bill as you only pay for the gas you use.
Below, we’ve put together some answers to your questions about the cost of gas and how it impacts your bill.
1) Why are natural gas prices almost double than they were last year?
There have been supply and demand issues within the industry, and U.S. exports have grown faster than expected. This has contributed to nationwide storage inventories being lower than last year and the five-year average. With demand growing at a greater rate than production, prices have surged globally, resulting in a higher cost of gas. As a result, natural gas prices are between 70% to 90% higher than the same time last year.
For example, in Kansas in January of 2021 the cost of gas was $4.1450/MCF while in January 2022 the cost was $7.4293/MCF.
2) Who sets the price of natural gas? Isn’t this price gouging?
We don’t set the price of gas, nor do we profit from this portion of your bill. Natural gas is a commodity and prices are determined by the open market. When there is a higher demand for natural gas, it typically results in higher prices. Demand can fluctuate because of factors including weather, economic conditions, and petroleum prices. Supply can fluctuate due to natural gas production, net imports, and storage inventory.
The price we pay the suppliers for gas is the price customers pay, so we continually work to secure the lowest gas prices possible.
3) How do you protect customers from rising natural prices?
We purchase natural gas from a number of suppliers through a competitive bidding process. We buy gas in the summer months, when prices are typically lower, and place the gas in storage for winter usage.
We also follow a Hedge Program that works like an insurance policy to help protect our customers from price hikes. Our supply portfolio is diversified and consists of a mix of storage gas, short-term and long-term contracts, and spot purchases. By doing this we can reduce price volatility and ensure that we have adequate supplies.
4) Where do you purchase your gas? Can you name your suppliers?
We purchase our supply from marketers and producers, through a competitive bidding process, for delivery into pipelines connected to our system. This bidding process helps protect customers from increases that may occur. We utilize industry standard contracts with our suppliers. While those contracts are confidential, in Kansas we report all of our purchases and supplier information to our regulators.
5) Is there anything I can do to protect myself from increases in natural gas prices?
If you’re looking for more predictability in your bill each month, consider enrolling in our Average Payment Plan, which is based on a 12-month rolling average of your natural gas bill. This is a way to reduce the volatility of seasonal energy expenses by spreading out the cost throughout the year.
There are some simple steps you can take to help manage your usage to protect against price increases. The more gas you use will typically result in a higher utility bill. By working to reduce your energy usage, you can help reduce the impact of increased natural gas prices. Here are some ways you can help keep your bills lower.
- Maintain your heating system. Have a qualified contractor inspect your heating and cooling equipment annually. Replace or clean your heater’s air filters.
- Keep the cold air out. Seal off unused rooms to prevent unnecessary heating. Apply weatherstripping and caulk to seal gaps and cracks around windows and doors to stop air leaks and prevent energy loss.
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