Why Get Deregulated Natural Gas?

So what exactly is natural gas deregulation? Deregulation is the unbundling of the commodity (the actual natural gas) and the transportation or delivery of the commodity. Until a few years ago, energy markets in Texas were comprised of legal monopolies that left natural gas consumers without a choice for their natural gas provider. Deregulation allows consumers to choose their supplier from a handful of natural gas companies that serve the Texas market.

One important thing that did not change is the reliability of your service. Depending on what area of Texas you live in, your gas utility will vary. Centerpoint Gas and Atmos Gas are the main utilities and service the majority of the state. While Texas is one of many states with deregulated natural gas, it is still considered only partially deregulated because residential and smaller commercial accounts still do not have the right to choose.

How Gas Prices Are Determined

Natural gas prices are generally determined by the NYMEX (New York Mercantile Exchange) which is sometimes a volatile national commodity market. The NYMEX uses the Henry Hub in Erath, Louisiana as the centralized pricing point. Other local indices are sometimes used instead such as the Houston Ship Channel (HSC) Index. Natural gas companies buy gas wholesale in the highly competitive national market, trying to procure the commodity at the lowest possible cost. Wholesale prices are continually fluctuating according to supply and demand as well as other market influences such as weather and natural gas storage.

Natural gas travels at an average of 13 miles per hour under normal pressurized capacity through a vast network of pipelines, hubs and city gates stations. Tariffs are charged for passage through these channels in addition to storage losses and fuel charges that are incurred while transporting the natural gas to the burner tip. Schedulers have to forecast these transportation charges for the delivery of your natural gas.

The Price on Your Natural Gas Bill

Your natural gas bill reflects additional charges beyond the unit price of gas for your usage. You'll pay transportation costs, distribution costs and sometimes other fees depending on where you live and from which supplier you receive your gas service. These charges mostly help recover the costs of delivery of natural gas from the purchase point to your home or business. In addition to the charges for your natural gas and its delivery to your house, you will have to pay sales tax and usually a monthly meter maintenance fee.
smile icon

Subscribe here