Editor’s Note: This is one of a 14-piece series NGI undertook as the energy industry readied for the new year, with Lower 48 natural gas and oil supply continuing to surge in an uncertain environment as liquefied natural gas exports ramp up, Mexico markets remain shrouded and stakeholders demand more value. Get your complimentary copy of NGI’s 2020 Special Report today.

Wholesale natural gas prices have continued to trend downward as the transition to a new calendar year sets in, but retail prices vary among regions and individual gas distribution utilities.

The U.S. Energy Information Administration (EIA) said benchmark Henry Hub prices averaged $2.64/MMBtu in November, up 31 cents from October, but it is forecasting an average spot price of $2.45/MMBtu next year, or 14 cents lower than the average for all of 2019.

A key driver for lower wholesale prices is the projection for U.S. gas production to remain robust, averaging 92.1 Bcf/d in 2019, up 10% from 2018. EIA divides the nation into nine regions, with rates in New England and the Pacific among the highest.

EIA’s projections for average retail prices in 2020 are expected to be lower year/year in four regions, including New England ($13.65/MMBtu), but the Pacific ($12.68/MMBtu) is expected to be up slightly. The average U.S. residential gas rate is predicted to drop in 2020 to $10.73/MMBtu from 2019’s $10.97 average.

UK-based National Grid’s New England operations involve combination gas/electric utilities in multiple states, and the differences between Massachusetts and Rhode Island are typical of the U.S. operations. Gas cost recovery processes are annual in Rhode Island and monthly in Massachusetts, and rates are down in both states.

On an annual basis, Rhode Island residential heating customers are paying an average of more than $1,200, about 11% less than 2018, according to spokesperson Robert Kievra. In Massachusetts, a typical residential heating customer now pays about $190/month, a decrease of $14, or 7%, compared with last winter, he said.

“The decreases are primarily driven by either lower commodity costs or the expiration of a capital cost tracking mechanism in the rates in Massachusetts,” Kievra said.

Examples of the regional price differences can be found between Spokane, WA-based Avista Utilities, which covers three Pacific Northwest states, and Minneapolis-based Xcel Energy Inc., which serves eight midwestern and western states.

Avista, which provides gas utility services in Idaho, Oregon and Washington, projected average retail monthly gas bills to increase to $54.94 in 2019 from $46.04 in 2018.

“Avista makes different rate requests across Washington, Idaho and Oregon each year,” said spokesperson David Vowels. “There were three natural gas rate changes in 2019 resulting in overall rate increases.”

Washington regulatory staff and Avista reached a partial settlement to reduce the combined natural gas and electric general rate case by $22.2 million. If approved by the Utilities and Transportation Commission (UTC), retail utility charges would go up on April 1.

Customers of Xcel’s combination Colorado utility are to see a significant decrease in their natural gas bills in 1Q2020, while electric bills will marginally increase, according to spokesperson Michelle Aguayo.

Xcel’s Colorado residential customers are to see a monthly decrease of more than 25% in the first quarter from a year ago of more than $20/month. Small businesses will see an average monthly decrease of nearly $95 from 1Q2019.

“A year ago, a reduction in supply caused natural gas prices to spike, resulting in higher gas prices in the first quarter of 2019 than the company had experienced since early 2015,” Aguayo said.

In South Dakota, Texas and New Mexico, Xcel has only electric operations, and in three other states with gas utility operations, only Minnesota has rate action with a 3.2% decrease as a result of the federal Tax Cuts and Jobs Act.

“Customers also received refunds due to tax reform this summer and this December for their 2018 usage and their January-May 2019 usage, respectively,” said Xcel spokesperson Matthew Lindstrom. “The average residential gas customer received a refund of $8.92 in 2018 and $5.01 for the first five months this year.”

The reduction will continue in 2020 for Minnesota customers where an average monthly gas residential utility bill was slightly above $58 in 2019. In North Dakota, the average was slightly above $46, and in Wisconsin it was nearly $60. Xcel had no gas rate increases in Wisconsin and North Dakota in 2019, and Wisconsin customers will have an average decrease of 4.6% in 2020 rates from tax reforms. “In North Dakota, we have yet to determine if we will apply for any gas rate changes in 2020,” Lindstrom said.

Bismarck, ND-based MDU Resources Group similarly operates an eight-state utility system with three pending gas rate cases going into 2020 in Washington (Cascade Natural Gas Co.), Minnesota (Great Plains Natural Gas Co.) and Wyoming (Montana-Dakota Utilities).

MDU’s gas rates in Washington and Oregon are to increase through the purchased gas adjustment (PGA) mechanisms from higher regional costs for gas supplies. Idaho is to have a slight decrease from the PGA for Intermountain. Cascade has a 10.8% rate hike, and it’s 8.5% in Oregon.

Meanwhile, Rapid City, SD-based Black Hills Corp., another multi-state utility holding company, has proposals in a half-dozen states to consolidate multiple gas utilities and adjust the rates on a consolidated basis. In Colorado and Wyoming the gas utilities are seeking increases in annual revenues to cover added investments in safety, reliability and system integrity programs. In Wyoming four utilities seeking consolidation have requested $16.1 million in annual revenue increases, and in Colorado the newly consolidated utility has requested $2.5 million in added annual revenues.

On a 3Q2019 earnings conference call, Black Hills CEO Linn Evans reported that the gas utilities are continuing their progress on the rate cases and consolidation, and in Nebraska, state regulators have approved the consolidation Jan. 1 of two previously separate gas utilities.

San Francisco-based Pacific Gas and Electric Co. (PG&E) settled its pending general rate case at the California Public Utilities Commission earlier in December, agreeing to forego its proposed rate increase request for about half of what it was asking, $575 million, with less than $50 million for gas operations. The rate case settlements set subsequent increases in 2021 and 2022 that collectively add another $685 million, moving overall revenues to close to $10 billion in 2022.