Natural gas prices to remain higher into winter

The increase in the price of natural gas across the U.S. is likely to impact local electric and natural gas utilities and their customers this winter.

Higher natural gas market prices impact not only natural gas utilities but electric utilities as the price of natural gas typically drives the overall price of wholesale elec­tricity markets.

The market price for natu­ral gas in the U.S. has increased significantly since 2020, when the market spot price for natural gas was in the low $2 per MMBtu range. Since then, it has risen at times to more than $9 per MMBtu. Currently natural gas pric­es are fluctuating between $5-7 dollar per MMBtu and remain highly volatile.

The market price for natural gas is primarily impacted by the interplay between supply and demand. The current high market price is the result of a low supply/high demand environ­ment. Natural gas storage levels remain significantly less than the five-year average. Contributing factors include:

  • Natural gas production decreased significantly during the 2020 pandemic year.
  • After the pandemic year, de­mand (usage) in the U.S. increased, while production lagged behind.
  • More natural gas is being used for electric power generation, which contributes to lower supply. The stronger demand for natural gas by the electric power sector is due primarily to the transition to more renewable energy.
  • Exports of Liquified Natural Gas (LNG) are steadily rising, es­pecially to meet the demand in Eu­ropean and Asian markets where prices are significantly higher. The Asian spot market is averaging $38 per MMBtu and Europe is at $53 for the upcoming winter.
  • Significant demand for natural gas has kept storage levels below the five-year average. The U.S. Energy Information Admin­istration (EIA) forecasts indicate storage levels will be 6% below the five-year average by the end of injection season in October.

In October, the EIA's Short-Term Energy Outlook projected natural gas prices to average in the $7/MMB­tu range through the rest of 2022 and then fall below $6/MMBtu in 2023 as production slowly increases to better meet demand.

Natural gas and electric utilities impacted

The Municipal Energy Agen­cy of Nebraska (MEAN) has seen significant increases in power prices in wholesale electricity markets. MEAN has a diverse power resource mix that includes electric generation ownership and ­power purchase agreements. These resources are economically dis­patched by the market, providing revenues to help offset some of the cost of market purchases to serve electric load.

The National Public Gas Agen­cy (NPGA) uses a diverse portfolio of gas supply to mitigate market price spikes. Through NPGA’s board-directed hedging program, a portion of members’ anticipated use is hedged more than a year in advance, which serves to level the cost of gas, mitigates forward-ex­posure to commodity risk and pro­vides savings to members during times of a rising spot market.

Most ACE (Public Alliance for Community Energy) customers are on a fixed rate option for their natural gas. However, since natural gas rates have significantly risen the past couple of years customers are likely to notice higher heating bills this winter. In addition, since natural gas prices are expected to remain higher for the 2023 Choice Gas selection period next spring, customers may see higher rates for the 2023-24 gas year, which runs June 1, 2023-May 31, 2024.

For utilities, now is a good time to remind customers how to save on their winter utility bills through energy efficiency.

MEAN, in partnership with the local electric utilities it serves, pro­vides a suite of energy efficiency programs that offer cash incentives paid directly to customers to help cover the cost of energy efficient upgrades. Program information and applications are on MEAN’s website.

The Voice of Choice

"Oshkosh is proud to say we have been a member of ACE for more than 20 years! Some of our ACE revenue checks have been used for our new swimming pool, a batting cage for the baseball field and park shade structures. This is noticeable evidence for years to come of how Oshkosh residents will benefit...
LeAnn Brown
Oshkosh, Neb.
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"ACE has always emphasized the importance of having competition and of driving the price down for the benefit of Choice Gas customers. ACE also does a great job of serving as an advocate for customers -- that's something that I emphasize a great deal with our local customers."
Randy Horst
Gurley, Neb.
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“ACE has returned more than $63,000 to the City of Neligh through its revenue return program. We’ve always used our ACE funds for community improvement projects such as a county-wide alert system, playground equipment and other park improvements.”
Dale Wilkinson
Neligh, Neb.
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