Slide 13 of 15
Notes:
A key concern about the level of current wellhead 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: 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:
- Gas supplies to residential customers generally are arranged prior to delivery, and agreed price terms, while flexible, generally do not fully reflect contemporaneous wellhead price shifts
- Gas commodity charges are a fraction of the delivery price for small customers–averaging about 33 percent during the heating season. Costs of services–e.g., transportation, storage, and local delivery–are the major cost components for gas sold to residential customers
Residential prices are expected to be about 25 percent higher this winter over last, which could increase gas bills to residential customers by about 40 percent under normal weather conditions. If the winter is colder, the increased consumption, coupled with the higher prices, will magnify the increase in total residential gas bills
