Natural Gas FAQs
Natural Gas: America's Most Popular Home-Heating Fuel
Natural gas is America’s most popular home-heating fuel – heating more households than all other energy forms combined. In all, 52 percent of all heated U.S. households have natural gas heat. Of the remainder, 31 percent heat with electricity, 9 percent use fuel oil, 6 percent use propane and 2 percent use wood, kerosene or other fuels.
The natural gas rate local customers pay is made up of three components:
- The cost of the natural gas commodity itself,
- The cost to transport the gas from where it is produced (primarily from the Gulf of Mexico, Texas and Louisiana) to the city utility, and
- The cost to transport the gas from the citygate to the customer’s home.
The cost to transport the gas to the home is a regulated (by local government), fixed cost based on consumption. The cost to transport the gas interstate to the city is also a regulated (by the Federal Energy Regulatory Commission) fixed cost; however, the third component, the natural gas commodity price, fluctuates with the market as it reacts to weather and supply and demand issues. It is this component, which can swing wildly, that is going up and resulting in the anticipated higher winter heating bills.
Weather is often the biggest factor in how much residential customers pay for natural gas during the winter. Natural gas prices remain quite sensitive to weather, for three main reasons:
- Heating demand: The weather is a major factor in how much energy people use to heat their homes. If it’s colder, people tend to use more energy. So even if the wholesale price of energy stays the same from one winter to the next, consumers will receive higher bills if they consume more energy than they did the year before.
- Cooling demand: An increasing amount of natural gas is being used to generate electricity. Many of the newer “peaker” power plants that generate extra electricity during periods of peak demand – such as during summer heat waves -- run on natural gas.
- Natural gas production: As we saw during Hurricanes Katrina and Rita, major weather events can disrupt natural gas production in the Gulf of Mexico. Initially, Hurricane Katrina reduced natural gas supplies by an estimated 8.8 billion cubic feet per day.
We want what our customers want: an ample supply of natural gas at affordable prices. And consumers love natural gas – but they do not like surprises. So natural gas utilities take a number of actions to stabilize natural gas prices and help consumers deal with fluctuations in their energy bills:
- Membership in MGAG – As a Member of the Municipal Gas Authority of Georgia, one of more than 70 Municipally-owned and operated systems in the country, we are actively taking steps to reduce the impact of wholesale natural gas prices on consumers. The Gas Authority aggregates the natural gas supply needs of its 73 Member systems to negotiate better volume pricing through greater economies of scale.
- Billing plans (if applicable)– We offer balanced-billing plans annually in June that allow customers to spread their natural gas costs over many months, which makes it easier for people to handle winter heating bills. Consumers may pay ahead during warmer months to help ease the burden of higher winter gas bills. Also, pick up a copy of conservation tips that will help with savings.
