How to Properly Compare Natural Gas Prices

Navigating the natural gas market can feel complex, especially with choices available in deregulated areas. In these markets, consumers can select their natural gas supplier, fostering competition and potentially leading to more favorable pricing and diverse service offerings. Understanding how to compare natural gas prices is important for making informed decisions that impact household budgets.

Understanding Your Natural Gas Bill

A natural gas bill typically consists of several key components. The supply charge covers the cost of the natural gas consumed, and in deregulated markets, this portion can be influenced by choosing a different supplier.

The delivery or transportation charge compensates the local utility for moving gas to your home, maintaining lines, meter reading, and customer service. Bills also include various taxes and regulatory charges, which vary by jurisdiction.

To accurately compare offers, locate your historical natural gas usage, often measured in therms or CCFs (hundred cubic feet). Most utilities and suppliers bill based on therms, representing the energy content of the gas (one therm equals 100,000 BTU). Your bill usually provides a conversion factor if usage is listed in CCFs (1 CCF is approximately 1.025 to 1.036 therms). Reviewing at least 12 months of usage data helps account for seasonal fluctuations.

Exploring Natural Gas Pricing Structures

Natural gas providers offer various pricing plans, each with distinct characteristics regarding price predictability and flexibility. Fixed-rate plans provide a stable price per unit of gas (e.g., per therm) for a predetermined contract duration, typically 6 to 36 months. This protects consumers from market price increases, offering budget certainty. However, if market prices decline, the fixed rate does not adjust downward.

Variable-rate plans feature a price per unit that fluctuates monthly based on market conditions, such as the New York Mercantile Exchange (NYMEX) settlement price. These plans generally do not require a long-term contract, offering flexibility but exposing consumers to price volatility. While a variable rate might be lower during periods of reduced market prices, it can increase significantly during peak demand or supply shortages.

Indexed plans tie the natural gas price to a publicly traded market index, often with an added differential that remains fixed. This allows consumers to benefit from market price dips while maintaining transparency as price adjustments are formula-based. These plans are often suitable for those comfortable with market exposure and seeking flexibility to convert to a fixed price if market conditions become favorable.

Sources for Comparing Natural Gas Prices

Finding current natural gas price offers involves consulting various resources. Your local utility company’s website is a primary source, as they typically offer a standard service option even in deregulated areas. They also often provide information on how to compare their rates with alternative suppliers.

State-specific energy comparison websites, often managed by public utility commissions, are valuable tools for consumers in deregulated states. These platforms allow for direct comparison of available plans, rates, and terms from multiple licensed providers in a standardized format, aiding in an “apples-to-apples” comparison.

Reputable third-party energy broker or comparison websites also serve as central marketplaces for natural gas offers. These sites aggregate plans from numerous suppliers, allowing users to filter options by rate type, contract length, and provider preferences. Examples include Constellation, XOOM Energy, and IGS Energy, which operate in multiple deregulated markets. Entering your ZIP code on these platforms helps narrow down available plans.

Key Factors for Evaluating Natural Gas Offers

Evaluating natural gas offers requires a thorough review of the supply rate and associated contract terms. The supply rate, expressed per therm or CCF, is the direct cost of the gas. Comparing this rate across different plans using historical usage data helps project total estimated costs. For instance, if a household uses 100 therms per month, a $0.10 per therm difference translates to $10 monthly, or $120 annually.

Contract length is another factor, with terms typically ranging from 6 to 36 months. Longer contracts provide extended price stability but may include early termination fees (ETFs) if canceled before expiration. These fees can range from $50 to $200 or more, which is important to understand, especially if relocation is possible. Also, check for introductory rates that might increase after an initial period.

Beyond pricing, customer service reputation is a consideration. Online reviews and ratings offer insights into a provider’s reliability, billing practices, and responsiveness. Some consumers may also prioritize providers offering renewable natural gas (RNG) options, derived from organic waste materials, which contribute to environmental goals. While not directly affecting conventional gas prices, these benefits align with personal preferences.