Natural gas prices have dropped: Here's what you should do to save money
It’s time for a natural gas update as prices and future forecasts have been dropping.
In the fall of 2021, I advised those on Dominion’s default or Standard Choice Offer (SCO), which were near wholesale rates, to switch to a fixed rate or aggregation rate. Prices were rising and energy forecasts were high through 2022.
Prices went all over the place. We were getting used to prices in the $3-per-thousand-cubic-feet (mcf) range. The SCO went as high as $9.53/mcf in September 2022 and as low as $4.17/mcf in January 2022 and mostly everything in between.
What’s happening natural gas now with prices?
The latest Short-Term Energy Outlook on Feb. 9 from the U.S. Energy Information Administration anticipates the average wholesale price to be $3.40, down almost 50% from last year and about 30% from its January forecast.
After September’s high of $9.53, the price went to $7.05 in October, $5.37 in November and $6.89 in December. In January, the SCO was $4.89 and the February SCO is $3.29.
Last fall, there were worries about a particularly cold winter in the U.S. and Europe and natural gas inventory was lower than the normal five-year average, said Dave Jankowski, NOPEC chief marketing and communications officer, who watches the utility markets closely. NOPEC is a large aggregator or bulk buyer, with more than 450,000 gas customers in Summit County as well as some communities in Medina and Portage counties.
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There also were worries about a Russian embargo, which would partially cut off natural gas exports in Europe so conservation efforts began in Europe and prices began to spike, he said. The U.S. has had an unusually warm winter and conservation efforts in Europe worked, where temperatures have also been warmer, said Jankowski.
Drillers, who had stopped or slowed drilling when prices were so low, started drilling when prices rose.
“Now we have more supply than demand and the market has flattened back down,” said Jankowski. Though we’ve been lucky with a mild winter, even if there was a bitter cold stretch or severe winter storms, Jankowski said there is enough in storage and we are close enough to spring that he does not anticipate it would affect pricing.
There’s also good news for pricing of the SCO. Each year, there is a new auction to set the “adder” price for the state-approved formula. The Feb. 8 auction price was 31 cents, effective April 1, up from 18 cents. That’s still really good, especially with wholesale prices coming down.
That adder is still low compared to other Ohio gas utilities, said Ella Hochstetler, director of regulatory and pricing for Dominion Energy Ohio.
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What’s the latest advice?
All of the reasons above are enough for me to move back to the SCO. My community’s aggregation price was not appealing and I had locked into a $6.29/mcf fixed rate for 32 months with no cancellation fee with Direct Energy last fall after coming off a great $2.39/mcf rate the previous year.
There isn’t a one-size-fits-all answer because it depends on your situation. For instance, what's your current rate, contract length and are there any cancellation fees?
Here are a few scenarios:
If you have a higher fixed rate with no cancellation fee and you will save by going on the SCO, make the move. It will take one to two billing cycles to switch. I made two phone calls. First, I called Direct Energy to ask for the current fixed offer with no cancellation fee that was lower than what I had. (I'd like to get some savings until my switch is complete.) Then I called Dominion to return to the SCO. For the first two months after a switch, the price will say Standard Service Offer (SSO). It is the same price as the SCO, but includes delivery charges, which are normally a separate line item. If you don't see the SCO by the third month, call to confirm.
Check your city’s aggregation plan. Some communities locked in to what turned out to be a low price before the price spikes. If you live or have a small business in Akron, the Constellation Energy aggregation is $4.06 fixed through November 2024. That’s still a very good price, so you could stay where you are and see if the SCO prices continue to go lower, or you can switch to the SCO. Call Constellation at 833-500-2738. Here's a few others: Stow $2.84/mcf fixed through 2024; Hudson $4.05/mcf fixed through October 2023 and Fairlawn $3.59/mcf through October 2025.
If you live in a NOPEC gas community, which includes a large portion of the Akron region, NOPEC's default or "program rate" is too high at $7.29/mcf through at least the end of March. Call NOPEC and request to switch to the variable program, which is 2 cents below the SCO. Note that NOPEC will be sending its re-enrollment letters by the end of March, which typically require customers not to do anything to be included in the aggregation. However, that automatically puts everyone on NOPEC’s program rate, so customers have to re-request the variable rate.
If you are stuck on a high-fixed price contract with a high cancellation fee, you’ll have to weigh whether that cancellation fee is worth it. Take the difference between prices and multiply by 100 (the average annual mcf usage) to see the savings.
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What about electricity?
Fluctuations in the electricity market didn’t rise as early as natural gas. Electricity prices began to rise last fall instead of late 2021, said Jankowski.
The electricity default price or “price to compare” for Ohio Edison is determined in a different way than gas. The price is a series of auctions over the course of a year.
Last Fall, NOPEC and other retailers’ rates were higher than the utility’s price because the rate was determined largely in auctions conducted before April, when energy prices were considerably lower.
In August, NOPEC made an unprecedented move and returned its 550,000 electricity customers to FirstEnergy utilities, saying they would save money. NOPEC said it intended to re-enroll the customers this spring when they could offer competitive prices.
Competitors who had agreed to provide the utility default pricing cried foul and the Public Utilities Commission of Ohio suspended NOPEC’s certification to be an electric aggregator while a case is pending. A decision is expected by March if NOPEC can re-enroll customers.
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In the meantime, the Ohio Edison default price of 5.38 cents/kWh is cheaper than any fixed-rate offer on the Apples to Apples chart at www.energychoice.ohio.gov so unless you are on a fixed rate or aggregation that is cheaper, you should return to Ohio Edison for now.
Many community electric aggregation prices with Energy Harbor, which were set several years ago, are cheaper: Akron and Barberton both are on a fixed rate of 4.97 cents/kWh through May 2025; Green is 4.91 cents/kWh through May 2024; and Tallmadge is 4.96 cents/kWh through May 2024. Summit County townships (with the exception of Sagamore Hills, which is in the NOPEC aggregation) are in an Energy Harbor contract for 4.67 cents/kWh through May 2024.
You can call Energy Harbor to find out more: 888-254-6359. If your community is not with Energy Harbor, call your local community or search online.
Keep up on utilities
I have an online Utility Guide, which has a lot of nitty-gritty information that I can’t cover here in this column or that I've covered before. It can be found at www.tinyurl.com/UtilityGuide
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ. To see her most recent stories and columns, go to www.tinyurl.com/bettylinfisher
This article originally appeared on Akron Beacon Journal: Natural gas prices have dropped: Here's the latest advice
