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Default Natural Gas Rates Increased Significantly from 2021

By Luke Massa posted 24 days ago

  

Ohio customers have the ability to shop the “supply” or “usage” portion of their natural gas bill. This should not be confused with the distribution and delivery portion of your gas bill which cannot be shopped. Ohio utilities include Duke Energy, CenterPoint, Columbia Gas of OH, & Dominion Energy.

Ohio customers who choose NOT to shop their supply rate through a natural gas supplier, end up on their respective utility’s default rate. Most utilities call their default rate the “Standard Choice Offer (SCO) or in Duke Energy it’s called the Gas Cost Recovery (GCR). For all utilities in Ohio, the default rate floats monthly and is mainly driven by the monthly New York Mercantile Exchange (NYMEX) natural gas settlement price. The NYMEX is the world’s largest physical commodity futures exchange.

For most utilities in Ohio, the default rate is calculated by taking the NYMEX settlement price each month PLUS an adder that has been determined by the utility through an auction process. The NYMEX is the driving force for each default rate and in May 2022 it settled at $7.267 per MMBTU which is the highest it has been since October 2008. In June 2022 the NYMEX settled at $8.908. As a result, most default rates are set to be around $1.00/CCF or $10.00/MCF in June 2022. This is a significant increase though most customers will not feel the effects due to low gas usage in the summer months. However, the NYMEX futures are currently trading over $8.50 for the rest of 2022 and we do not see a decrease until April 2023. Customers who are still on the default gas rate with their respective utilities, are likely to experience a significant increase in their gas costs when temperatures drop.

Here’s a brief snapshot of each utility’s default rate for the last 12 months.

 

Default Rate 12m Snap Shot (Per CCF)

Month

Duke

CenterPoint

Columbia Gas OH

Dominion

Jun-22

$1.1666

$1.0602

$1.0558

$0.9088

May-22

$1.0277

$0.8846

$0.8917

$0.7447

Apr-22

$0.8540

$0.6780

$0.6986

$0.5516

Mar-22

$0.7113

$0.6459

$0.6268

$0.4718

Feb-22

$0.6209

$0.7864

$0.7965

$0.6415

Jan-22

$0.6278

$0.5466

$0.5724

$0.4147

Dec-21

$0.7150

$0.6988

$0.7147

$0.5597

Nov-21

$0.8285

$0.7796

$0.7902

$0.6352

Oct-21

$0.7479

$0.7410

$0.7541

$0.5991

Sep-21

$0.6969

$0.5836

$0.6070

$0.4520

Aug-21

$0.6748

$0.5487

$0.5744

$0.4194

Jul-21

$0.6069

$0.5030

$0.5317

$0.3767

 

If the NYMEX futures hold steady the average default rates could range from $0.90/CCF to above $1.00/CCF next winter. Here’s a quick chart that showing average winter rates for the past 5 years.

 

Avg Winter Default Rate (November - March) CCF

Period

Duke

CenterPoint

Columbia Gas OH

Dominion

2021-2022

$0.7007

$0.6915

$0.7001

$0.5446

2020-2021

$0.3630

$0.3740

$0.3865

$0.2945

2019-2020

$0.3527

$0.3188

$0.3365

$0.2405

2018-2019

$0.4073

$0.4747

$0.4702

$0.3539

2017-2018

$0.4863

$0.3777

$0.4417

$0.2871

 

It’s very important to understand how these increases will impact your school’s costs/operations. It’s even more important to have a plan and strategize how to reducing these costs when possible.


Luke Massa is a Sales Manager at Energy Alliances. 513.794.5555 | lmassa@energyalliances.com | Energy Alliances is an OASBO Benchmark Program Provider. Click here to learn more.

 

Disclaimer: Above is an attempt to give readers a general sense of how gas rates may adjust this summer if taking default service from the local EDU based on rates filed in mid-May ‘22. EDU’s can adjust rates as needed. The reader should use the information above as a reference and not make any decisions until speaking with an energy professional or researching their own individual situation.

 

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