Slide 3 of 10
Notes:
- A key concern about the level of current upstream prices is the impact on consumers, especially residential and small-volume commercial customers
- Using monthly average prices for residential customers and daily Henry Hub spot prices for the past 4 winters and EIA’s latest projection (January STEO): significant price fluctuations are apparent at the Henry Hub, but residential prices respond relatively less. The major reasons for the lesser response in residential prices are:
- Residential prices are monthly averages, which will not move as erratically as daily prices (even Henry Hub prices averaged over a month are much less volatile)
- Gas supplies to residential customers generally are arranged prior to delivery, and agreed price terms, while flexible, may not be fully responsive to contemporaneous upstream price shifts
- Gas commodity charges are a fraction of the delivery price for small customers–averaging about 33 percent during the heating season, although that fraction is expected to exceed 50% this winter. Costs of services–e.g., transportation, storage, and local delivery–are the major cost components for gas sold to residential customers
