Wednesday, November 12th, 2008
Natural gas rates low now but price could go up later
By Janie Southard
The low natural gas prices just now are causing area residents to take a look at opting out of city gas aggregation programs. But take a long look at this moving target, say the experts.
"Natural gas is the most volatile commodity. Because they tend to follow crude oil, prices are lower now. But natural gas prices are also weather driven and, thus, market driven. The weather gets cold; people want to stay warm. Supply and demand," said Doug Austin, vice president at IGS, a privately held energy marketer that includes St. Marys as an aggregation client.
Primarily due to large supplies of stored natural gas, as reported this week by the Energy Information Administration of the U.S. government, natural gas prices are hovering around $6.94 mcf (price per 1000 cubic feet) and projected for December delivery at $7.249.
But, Austin cautions that those type prices are future prices "like the stock market." The price also does not include transportation fees and taxes.
The first-year cost of the city of Celina's new two-year contract with Direct Energy, also an energy marketer, is $10.37 per mcf, which is effective for the January 2009 through December 2009 billing cycle. (Seniors 65 and older receive a discount of 10 cents per mcf.) The second-year rate will be negotiated later.
Tiffany Brown, a customer service representative at Direct Energy, told the newspaper Tuesday afternoon there is no penalty charge to opt out of the city's plan that locked in the $10.37 rate.
"And if you want back in later, there's no fee to come back," she said.
St. Marys aggregate customers, who had to choose by Nov. 1, also can opt out without charge. The St. Marys' program's contracted price of $10.91 is in effect for a one-year period, ending Oct. 31, 2009. Price for the year just ended was $9.99.
Residents who have individually "locked in a price" with Dominion East cannot get out without a penalty of $50, according to a comparison chart provided by Public Utilities Commission of Ohio.
Going with the current low natural gas rate, although it's variable, is tempting, but the only guarantee appears to be that there's no sure thing.
"There's just no way for us make recommendations. It all depends on individual choice. If you absolutely know what the weather will be in a couple months and what gasoline prices will be this winter, then you can make a real good call on going with variable rates," Austin said. "But, if you can't know the weather or gasoline, well ...."