Natural Gas Prices
There are two main components in natural gas bills:
Distribution – A charge for delivering natural gas to a home or business. The charge:
- Covers distribution system costs such as local pipes, meters and customer service expenses.
- Does not change monthly but is adjusted periodically after review by state regulators.
Supply or commodity - The cost of natural gas that MGE buys for its customers is passed through to customers as a separate charge on the bill. It changes monthly depending on the:
- Current market price of natural gas.
- Price of gas in storage.
- Financial hedging that mitigates volatile price changes.
Traded as a commodity
Natural gas is one of many commodities traded on the New York Mercantile Exchange (NYMEX). Gas prices can fluctuate due to:
- Changes in gas supplies, including production and storage. In addition to traditional domestic supplies of gas, the supply is affected by:
- Fluctuations in natural gas supplies from Canada.
- New sources of supply, such as shale gas extracted from new fields of exploration in Pennsylvania, North Dakota and the Texas Panhandle.
- Global tensions.
- High cost of competing fuels such as oil and propane.
- Weather, such as extreme cold weather or hurricanes that may damage gas facilities.
- Fluctuations in demand for natural gas both domestically and in oversea markets.
- Increasing reliance on natural gas to replace coal in manufacturing electricity.
At MGE, we:
- Aggressively pursue the best natural gas market prices available for customers.
- Begin to buy gas supplies in the summer and put this gas into storage to:
- Ensure adequate supplies for winter.
- Act as a hedge against possible higher winter prices.
- Employ a financial risk management program to reduce price swings for customers caused by volatile gas prices.
Control your costs
MGE offers energy-saving tips and billing plans to help you manage your energy costs.
For more information