Huntsville Utilities News
Huntsville Utilities Reduces Natural Gas RatesNovember 15th, 2012
Huntsville Utilities Reduces Natural Gas Rates
Huntsville Utilities today announced a rate decrease for all natural gas customers. The rate for Huntsville Utilities’ residential customers will be lowered by 10.2% from $9.70 to $8.71 per one thousand cubic feet (1,000 mcf). Small commercial gas customers will also see a 10.1% rate reduction from $10.05 to $9.03 per mcf. The new rates will be effective with meter readings beginning December 1, 2012.
Rates for other rate classifications, including large commercial and industrial customers, will also see reductions of 12%. The rate for transportation-only customers will remain the same, and availability charges will remain unchanged for all customer classes.
With the new rate, the average residential customer could see their monthly bill reduced by nearly $10 per month during the peak heating months of December through February compared to last winter.
The average residential gas customer uses approximately 10,000 cubic feet of gas per month during the heating season. The average usage of 10,000 cubic feet per month is based on a 1,800 square foot house using natural gas for heating and water heating.
Huntsville Utilities is able to offer this decrease based upon the average cost of natural gas hedged and our available storage capacity. The supply of natural gas has increased over the last few years as more gas is available because of new technologies such as hydraulic fracking. The increase in supply has lead to a decrease in the commodity price of natural gas in the energy marketplace.
Natural gas rates have three components: the actual cost of the physical natural gas (commodity cost), the cost to transport that gas to Huntsville, and the cost of operating the gas distribution system to deliver the gas to the customer.
The gas that Huntsville Utilities’ customers use is produced and refined along the Gulf Coast and then shipped by pipeline to north Alabama. Huntsville Utilities pays monthly transportation and storage costs associated with the delivery of the gas from the production area to Huntsville. Huntsville Utilities’ distribution costs, which include administrative costs as well as the costs necessary to provide required maintenance and capital investments in the gas system (as well as a 6% in lieu of tax payment paid to the city of Huntsville), are part of the rate.
Natural gas is a commodity traded on the Futures Market of the New York Mercantile Exchange (“NYMEX”). Pricing on NYMEX directly influences the price paid for natural gas by Huntsville Utilities. The commodity base price for gas in the new rate structure is $4.09.
The Huntsville Utilities gas system is the largest publicly-owned, not-for-profit gas system in Alabama serving over 49,000 customers in Huntsville and Madison County.
CONTACT: HU Public Relations Office