Natural gas prices have dropped: Here’s the latest advice
- Natural gas prices skyrocketed in late 2021 and 2022.
- Natural gas prices have fallen and the forecasts are good.
- Should you switch natural gas supplies? It depends..
It’s time for a natural gas update as prices and future outlook have come down.
In fall 2021, I advised those using Dominions Default or Standard Choice Offer (SCO), which were close to wholesale rates, to switch to a fixed rate or aggregation rate. Prices rose and energy projections were high through 2022.
Prices went everywhere. We got used to prices in the $3 per thousand cubic foot (mcf) range. The SCO rose to $9.53/mcf in September 2022 and $4.17/mcf in January 2022 and almost everything in between.
What is happening to natural gas prices now?
The US Energy Information Administration’s most recent Short-Term Energy Outlook, Feb. 9, forecasts an average wholesale price of $3.40, down almost 50% year-on-year and about 30% from the January forecast.
After the September high of $9.53, the price rose to $7.05 in October, $5.37 in November and $6.89 in December. In January the SCO was $4.89 and February was $3.29.
More:Betty Lin-Fisher: Looking for natural gas or electric rates in Dominion, FirstEnergy area? start here
Last fall, there were concerns of a particularly cold winter in the U.S. and Europe, and natural gas inventories were below normal five-year averages, said Dave Jankowski, NOPEC’s chief marketing and communications officer, who closely monitors utility markets. NOPEC is a large aggregator, or bulk purchaser, with more than 450,000 gas customers in Summit County, as well as some communities in Medina and Portage County.
More:“I’m Here Because Of Him”: Liver of Frat Hazing victim saves recovering alcoholic’s life
There were also concerns about a Russian embargo that would partially disrupt natural gas exports in Europe, so Europe began austerity efforts and prices began to rise, he said. The US had an unusually warm winter and conservation efforts were working in Europe, where temperatures were also warmer, Jankowski said.
Drillers who 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 out again,” said Jankowski. Though we’ve been lucky with a mild winter, even if there was a bitterly cold track or severe winter storms, Jankowski said there’s ample inventory and we’re close enough to spring that he doesn’t expect it to affect pricing.
There is also good news for SCO pricing. A new auction is held each year to set the “adder” price for the state-approved formula. The February 8 auction price was 31 cents, valid as of April 1, versus 18 cents. That’s still very good, especially with falling wholesale prices.
That adder is still low compared to other Ohio gas utilities, said Ella Hochstetler, director of regulation and pricing at Dominion Energy Ohio.
More:Ohio AG is suing MV Realty for ‘shameful business model’ to receive real estate listings
What’s the latest advice?
All of the above reasons are enough for me to return to the SCO. My community’s overall price wasn’t attractive, and I secured a fixed price of $6.29/mcf for 32 months with no cancellation fee with Direct Energy last fall after getting a great price of $2.39/mcf the previous year .
There is no universal answer as it depends on your situation. For example, how high is your current tariff, your contract period and are there any cancellation fees?
Here are a few scenarios:
- If you have a higher fixed rate with no cancellation fee and you save by switching to the SCO, move. The switch takes one to two billing cycles. I made two phone calls. First I called Direct Energy to ask about the current fixed offer with no cancellation fee, which was lower than what I had. (I want to save some until my switch is complete.) Then I called Dominion to get back to the SCO. In the first two months after a switch, the price will be Standard Service Offer (SSO). It’s the same price as the SCO but includes shipping costs, which are usually a separate item. If you don’t see the SCO by the third month, call to confirm.
- Check your city’s aggregation plan. Some communities settled on a low price before the price spikes, which turned out to be low. If you live in Akron or have a small business, Constellation Energy’s aggregation is $4.06 through November 2024. That’s still a very good price, so you could stay where you are and see if the SCO Prices keep falling or you can switch to the SCO. Call Constellation at 833-500-2738. Here are a few others: Stow $2.84/mcf firm through 2024; Hudson $4.05/mcf by October 2023 and Fairlawn $3.59/mcf by October 2025.
- If you live in a NOPEC gas community, which encompasses much of the Akron region, NOPEC’s standard or “program” rate of $7.29/mcf is too high until at least late March. Call NOPEC and request a change to the variable program, which is 2 cents below the SCO. Note that NOPEC will be sending out its resume letters by the end of March, which normally require customers to take no action to be included in the aggregation. However, this automatically puts everyone on NOPEC’s program tariff, requiring customers to re-request the variable tariff.
- If you stick to a contract with high fixed prices and high cancellation fees, You need to weigh up whether this cancellation fee is worth it. Take the difference between the prices and multiply by 100 (the average annual MCF usage) to see the savings.
More:Q&A: Do you have headaches or migraines? A doctor advises
what about electricity
Fluctuations in the electricity market did not rise as early as natural gas. Electricity prices started rising last fall instead of in late 2021, Jankowski said.
The Ohio Edison electricity standard price or “price to compare” is determined differently than gas. The prize is a series of auctions over the course of a year.
Last fall, NOPEC and other retailers’ tariffs were above the utility’s price because the tariff was largely set in auctions conducted before April, when energy prices were significantly lower.
In August, NOPEC took an unprecedented step, handing back its 550,000 electricity customers to FirstEnergy’s utilities, saying they would save money. NOPEC said it intends to resume customers this spring when they can offer competitive pricing.
Competitors who had agreed to provide standard utility pricing complained, and the Public Utilities Commission of Ohio suspended NOPEC’s certification as a power generator pending litigation. A decision is expected by March on whether NOPEC can re-register customers.
More:Could you afford $1,000 in emergency expenses? 57% of Americans can’t
Meanwhile, Ohio Edison’s standard price of 5.38 cents/kWh is cheaper than any fixed-price offering on the Apples to Apples chart at www.energychoice.ohio.gov. They should return to Ohio Edison for now.
Many Energy Harbor municipal power aggregation prices set a few years ago are cheaper: Akron and Barberton both have a fixed price of 4.97 cents/kWh through May 2025; Green is 4.91 cents/kWh by May 2024; and Tallmadge is 4.96 cents/kWh by May 2024. Summit County communities (excluding Sagamore Hills, which is part of the NOPEC aggregation) have entered into an Energy Harbor contract for 4.67 cents/kWh through May 2024.
You can call Energy Harbor to learn more: 888-254-6359. If your community is not affiliated with Energy Harbor, call your local community or search online.
Stay up to date with the utilities
I have an online utility manual that contains a lot of important 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[email protected]. Follow her @blinfisherABJ on Twitter orwww.facebook.com/BettyLinFisherABJ. To see her latest stories and columns, go towww.tinyurl.com/bettylinfisher