Natural gas utility charges declined in at least half of the U.S. states last year, with only six implementing higher rates year/year, according to data from the Energy Information Administration (EIA).
Twenty-five states showed decreases in citygate prices for 2018 over 2017, with 19 not yet reporting. Meanwhile, Alaska, Hawaii, Maine, New Jersey, New York and Rhode Island all raised their utility rates.
Individual utilities and regulators in each of the six states with citygate price increases offered slightly different reasons for the increases in their particular locations. Obviously, the remoteness and widely varying in-state energy resources between Alaska and Hawaii set them apart from the Lower 48 States. Hawaii has no in-state natural gas supplies, and depends on shipped supplies, along with synthetic natural gas (SNG) produced from naphtha and renewable natural gas (RNG) produced at a local wastewater treatment plant.
The relatively small and expensive shipped natural gas volumes pushed up the state's citygate prices, according to a Hawaii Gas spokesperson. In Alaska, the major gas distributor, Enstar Natural Gas, filed a 3.9%, 12-month gas cost rate reduction in July, but higher prices in the winter months of January through March skewed the state's 2018 citygate prices higher than they averaged the previous year.
In the four Northeast states of Maine, Rhode Island, New York and New Jersey where EIA reported higher citygate prices, the causes were relatively the same, a combination of continuing bottlenecks in the regional interstate transmission pipeline system and a deep, deep freeze last January that exhausted regional liquefied natural gas supplies early in the winter, driving up prices.
"While wholesale prices of natural gas have increased over this time, Public Service Electric and Gas (PSE&G)” of New Jersey “has lowered customer bills," said spokesperson Lauren Ugorji. "The typical residential customer saw a decrease in their annual bill from Dec. 1, 2017 to Dec. 1 last year of about $35 [$915 to $880]."
Overall charges are divided between the cost of gas as represented by citygate prices and distribution charges, or the cost of getting gas to customers. The majority of the changes in recent years have been driven by commodity prices.
Historically, distribution charges for the operations and maintenance of infrastructure systems began declining in the 1990s with year/year price decreases tied to efficiency measures and deregulation. Since the early 2000s, there has been a slight annual increase in noncommodity charges.
Drilling down to individual states, there was similar variation at the end of 2018. In Connecticut, regulators approved a rate settlement for Boston-based Eversource Energy's Yankee Gas to increase rates 0.3% in 2019, 2.9% in 2020 and 2.3% in 2021. Also in the East, Reading, PA-based UGI Utilities Inc. said its average residential bills would be dropping by 10.6%, or more than $11 monthly, because of a decrease implemented last month in its purchased gas cost.
"Natural gas continues to be an economical, reliable and environmentally responsible source of energy," said UGI's chief regulatory officer Paul Szykman, noting the decrease comes as the winter heating season begins.
New Jersey-based PSE&G has proposed a sweeping six-year energy efficiency program that is now under review by state regulators. PSE&G’s proposal would increase utility energy efficiency investments by 60% in the first year and up to 700% in the sixth year, compared to 2017 investments. Customers over the life of the program could save an estimated $5.7 billion, according to the utility.
In Florida, the Public Service Commission (PSC) has approved settlements that allow investor-owned utilities to pass on savings to their customers from the 2017 federal Tax Cuts and Jobs Act. For example, NextEra Energy Inc.'s Florida City Gas, the Office of Public Counsel and federal agencies agreed to a settlement that reduced rates beginning Jan. 1 by $305,000/year. The $305,000 reduction is to be repeated annually for the next five years.
With gas prices rising, however, some utilities have had to increase residential utility rates.
In Colorado, Xcel Energy Inc.’s Denver-based utility said starting in 1Q2019, residential gas utility customers would see an 8.7% increase in monthly bills, and small business customers face a 7.7% hike. "This is largely driven by an increase in natural gas prices as compared to a year ago," said spokesman Mark Stutz. "In 2018, there were cost adjustments and federal tax reduction adjustments, but no gas rate cases."
Meanwhile, New Mexico Gas Co. (NMGC) in December dropped its residential gas utility charges by 20% from 2017, when the price was 35 cents/therm. Gas customers are paying 28 cents/therm this month, which a utility spokesperson said is less than a third of the gas utility customers' cost of home heating 10 years ago.
"The average residential gas utility bill this December will total about $86, or $10 less than December 2017," said NMGC’s Gary Murray, director of gas supply.
Among the gas utilities in Black Hills Corp.'s family across eight states, gas distributors in Arkansas, Wyoming and Colorado had rate changes in 2018. Its Arkansas Gas Co. unit raised rates by $12 million/year as part of an effort to recover more than $160 million in safety, reliability and system integrity investments.
Rate hikes of $1 million and $1.1 million were secured by Black Hills' Northwest Wyoming gas utility and the Rocky Mountain Gas unit, respectively. Wyoming was part of the recovery of $6 million in investments in 620 miles of transmission and distribution pipelines, and in Colorado the rate hike was part of recovery of investments in an intrastate pipeline.
"In addition, we finalized tax reform in six states with customers in those states receiving benefits directly related to the reduction in the federal corporate income tax rate from 35% to 21%, and utility customers will see the benefits for 2018 of approximately $36.3 million," said Black Hills’ Jerome Nichols, director of investor relations.
In Washington, Cascade Natural Gas Corp. reached a settlement agreement with stakeholders and state regulators that resulted in a $2.9 million annual rate reduction, or 1.4%.
However, Omaha-based Berkshire Hathaway Energy has one of the nation's largest interstate gas pipeline operators, Northern Natural Gas Co., as well as gas utility operations at its MidAmerican Energy Co., which had no rate cases in 2018.
The federal tax reform act implemented in late 2017 “resulted in savings to our customers, and trackers and variable rates have changed over the year, but no rate cases," a company spokesman said.