July 2006
The 4-1-1 on Natural Gas Rates
Comparing gas prices can be confusing. That's why Walton EMC Natural Gas keeps your best interest in mind when setting prices each month.
We try to make it easy with basic rate plans. Even with simple variable and fixed prices, choosing a plan that's right for you may be difficult unless you understand the difference in pricing.
Walton EMC Natural Gas's variable rate varies month to month. It fluctuates based on the market's trends, including the supply and demand of natural gas and its price at the wellhead. No contract is required with the variable rate plan.
With today's market trends, you may opt for the 12 billing cycle fixed rate plan. This locks you into a rate for 12 billing cycles. You'll pay a set price each month according to your contract. Even if market trends cause prices to rise, you'll pay the fixed rate until your contract is up.
“The truth is,” says Walton EMC Natural Gas Director Allen Powers, “we can't predict future prices. But we do advise our customers to lock in to a fixed rate that they're comfortable paying for a year's time. No one knows the exact month when prices will be lowest.”
“You also risk paying a higher rate during some months when the variable price offered is lower.”
Compare our variable rate to our fixed price. In June, for example, our residential variable rate was $0.859 per therm, and 12 billing cycle fixed rate was $1.249. That's almost a 40-cent difference.
The demand for natural gas is lower in the summer when home heating isn't required. Eighty percent of our customer base consumes more natural gas, or experiences peak natural gas usage, from November to March. Over this five-month period natural gas prices are generally highest.
Walton EMC Natural Gas's summer fixed rate plans figure in the higher trading prices for natural gas during the winter months. The difference in the trading prices for natural gas on the New York Mercantile Exchange (NYMEX) is as much as 50 cents between June and the winter months.
“To set our variable price, we figure the NYMEX trading price at the wellhead and add transportation costs and fuel charges,” Powers continues. “When setting our summer fixed rate plans, we have to figure that the commodity price of natural gas is nearly double in the winter.”
“We hope that this spread between fixed and variable prices will begin to narrow this fall.”
Natural gas is traded as a commodity on the New York Mercantile Exchange along with coal, propane, gasoline and more. The natural gas futures price figures in delivery charges at the Henry Hub, where natural gas begins its transmission process in Texas and Louisiana.
Because natural gas prices are volatile, the NYMEX natural gas futures contract sets a benchmark price nationwide. Log on to nymex.com to learn more.
Read about Walton EMC Natural Gas's pricing options online at waltonemcgas.com. Click on Residential Pricing or Commercial Pricing. Also, check out the February and April 2006 issues of The Walton EMC Gasette in the online News Center.
Read other articles from The Walton EMC Gasette:
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Insulate
Your Attic to Save Energy |
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Exit the Gas
Roller Coaster With both arms in the air, breathe relief as you coast down the peak of winter's natural gas bills. |
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Most of the natural gas consumed in the United States is also produced in the United States. Learn more. |
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This month's recipe features Chicken Divan. |
Recipes
Gas up the stove using recipes from Walton EMC Natural Gas customers. Our customers are encouraged to submit their favorite and unique recipes to us throughout the year. Each month, one recipe is published in The Walton EMC Gasette for other customers to enjoy. The customers who get their recipe in the newsletter also receive a $25 credit toward their next Walton EMC Natural Gas bill.
Browse recipes featured in The Walton EMC Gasette.
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