What Does Your Natural Gas Bill Include?
Understand the structure of your natural gas bill to better interpret your household energy expenses.
A natural gas bill is a regular household expense, and understanding its various components can help consumers interpret their monthly charges. A natural gas bill details how consumption is measured, the costs associated with delivering gas, and any applicable taxes or additional fees.
Understanding Your Usage
Natural gas consumption is measured by specialized meters, typically in units of volume or energy. Common units include hundred cubic feet (CCF), thousand cubic feet (MCF), or therms. A CCF represents 100 cubic feet, while an MCF signifies 1,000 cubic feet. A therm, on the other hand, measures the heating value of the gas, with one therm generally equivalent to 100,000 British Thermal Units (BTUs). While CCF and MCF are volumetric, therms account for the actual energy content, which can vary based on factors like temperature and pressure.
Gas meters, often diaphragm or rotary types, physically measure the volume of gas flowing into a property. These meters track consumption through a series of dials or a digital readout, recording the difference between consecutive readings to determine the usage for a billing cycle.
Bills usually reflect either an actual meter reading or an estimated reading. An actual reading is based on a physical inspection of the meter by the utility. Conversely, an estimated reading occurs when the utility cannot access the meter and approximates usage based on historical patterns, weather conditions, and prior consumption data. If an estimated bill is issued, the difference between the estimated and actual usage is typically adjusted on a subsequent bill once an actual reading is obtained.
Supply and Delivery Charges
A natural gas bill typically separates charges into two primary financial components: supply and delivery. Supply charges, also known as commodity charges or gas costs, represent the actual cost of the natural gas itself. Utilities purchase this gas from wholesale markets, and this cost is passed directly to the consumer, often without markup, reflecting market price fluctuations. The supply portion can constitute a significant percentage of the total bill, often ranging from 45% to 70%.
Delivery charges, sometimes referred to as transmission, distribution, or service charges, cover the costs of transporting the gas from the source to your property. These charges include maintaining the network of pipelines, operating distribution systems, and performing meter readings and billing. Delivery charges often include a fixed customer charge, which is a consistent monthly fee regardless of consumption, to cover basic service infrastructure and administrative expenses.
The delivery portion may also include a variable component based on the amount of gas consumed, covering the operational costs. Some consumers have the option to choose a third-party natural gas supplier for the supply portion of their bill, while the local utility continues to provide the delivery service. Regardless of the supplier choice, the delivery charges remain with the local utility responsible for the physical infrastructure.
Taxes and Other Fees
Beyond the core supply and delivery charges, natural gas bills often include various taxes and other fees mandated by governmental entities or approved by regulatory bodies. Taxes commonly found on a bill can include state sales tax, local utility taxes, or gross receipts taxes. These taxes are collected by the utility and then remitted to the appropriate state or local authorities.
Other fees or surcharges may also appear on the bill. Universal service charges, for instance, often fund programs that assist low-income customers with their energy costs. Energy efficiency surcharges support initiatives promoting conservation.
Some bills may also include specific surcharges for infrastructure improvements, such as pipeline replacement projects, or for balancing costs related to system management. Additionally, a late payment fee, typically a flat charge or a percentage of the overdue balance, may be applied if a bill is not paid by its due date. The specific types and amounts of these taxes and fees can vary significantly depending on local regulations and utility policies.