Natural Gas Prices in the News as Mainers Prepare for HeatingSeason

September 15, 2016

Augusta, Maine – The Governor’s Energy Office (GEO) conducted its weekly heating fuel price survey on Monday, September 12, 2016, and found the current statewide average cash price for No. 2 heating oil was $1.88 per gallon, a price that has remained steady over the last month. Average statewide kerosene prices follow the same trend; this week’s price was $2.41 per gallon, the same price as several weeks ago. Propane prices have increased just a little, gaining three cents over the last several weeks, to $2.18 per gallon.

As Mainers prepare for the upcoming heating season, the price of natural gas for residential customers has been a topic of conversation – and confusion. The delivered price for natural gas to homeowners, where it is available, depends on which local distribution company, or LDC, delivers gas to that community.

A homeowner’s natural gas bill in Maine has two components – supply and delivery – which is similar to how electricity is priced in Maine’s deregulated market. Also like electricity, the Maine Public Utilities Commission approves the rates that these delivery companies can charge. The delivery rate depends on the business model proposed by each company, and approved by state regulators. So, if a company agrees to deliver to a more rural customer base, the delivery cost is higher overall, to reach these more costly-to-serve customers. However, if the company chooses to serve only customers in a downtown area, regulators approve a lower delivery cost to reflect the lower cost of serving this customer base.

Supply costs are separate from these delivery charges. Natural gas LDCs don’t produce the gas, so they must purchase it on the open market. Regulators approve the rate, and this cost is then passed through to customers. Each LDC in Maine charges for gas supply slightly differently. The price can fluctuate month-to-month, can be set at six month intervals, or can be set for a year at a time – but the model chosen by the company also has to be approved by the Commission. And, in winter, when demand is high, there isn’t sufficient pipeline space to deliver all the gas customers demand – so prices are higher in winter to reflect this situation.

So what do Maine natural gas companies charge? It depends on the company, as the chart on the next page illustrates.

Maine Natural Gas Distribution Companies’ Pricing 2015-2016

Local Delivery Co. Fixed Monthly Charge Supply (per therm)* Delivery (per therm) Misc. Fees (per therm) Total charge (per therm)
Bangor Natural Gas $14.29 $0.27-$1.39 $0.36 $0.002 $0.80-$1.29
Maine Natural Gas $27.89 $0.32-$1.71 $0.42 $0.02 $1.094-$2.48
Summit Natural Gas $20.57 $0.26-$0.88 $0.87 none $1.38-$2.00
Unitil $24.47 $0.24-$1.15 $0.39 $0.02 $0.94-$1.85

* range of supply prices charged Jan. 2015 -Sept. 2016; based on usage of 1,000 therms/year

So, for example, Bangor Natural Gas customers are charged a supply rate that varies month-tomonth; Summit and Unitil have summer versus winter supply prices, and Maine Natural Gas offers a lock-in-rate for one year, or a rate that varies monthly. As for delivery, Unitil and Bangor Natural Gas have lower delivery rates, as their customers are concentrated in downtown areas, while Summit’s delivery rates are higher to reflect that they serve a more rural, higher cost customer base. However, all prices are regulated, so there is no opportunity for companies to increase their prices without scrutiny by the Public Utilities Commission.

Using this week’s average heating oil price ($1.88), and converting to a common heating unit value (million Btu), the price of fuel oil is $13.56. This compares with an equivalent heating unit value for natural gas of $12.03 (at $1.20/therm); propane, $23.87 (at $2.18/gallon); kerosene $17.85 (at $2.41/gallon); wood pellets, $15.58 (at $258/ton); cord wood, $11.36 (at $250/cord) and electricity (electric baseboard), $38.10 to $55.69 (at 13-19 cents per kwh).

However, fuel prices are only part of the calculation when determining which fuel will save you more money over the course of a heating season. The type of heating system, as well as its efficiency, is also an important factor in determining final costs. The Energy Office has a calculator on its web site that allows consumers to explore these fuel options further, as well as compare efficiencies of heating systems most closely matching their own system. Heating costs vary considerably from home to home. The home heating calculator can assist homeowners in finding the best heating option for their home, location, lifestyle, and budget http://www.maine.gov/energy/index.html. Efficiency Maine also has a calculator on its website that can help consumers evaluate their heating options http://www.efficiencymaine.com/athome/home-energy-savings-program/heating-cost-comparison/

As of September 12, 2016


Heating Oil

Statewide

Southwest

Central

Eastern

Western

Northern

Average

1.88

1.86

1.87

1.90

1.83

2.03

High

2.19

2.19

2.00

2.09

2.02

2.05

Low

1.69

1.69

1.70

1.70

1.70

1.95

Kerosene

2.41

2.48

2.35

2.38

2.36

2.50

Propane

2.18

2.18

2.13

2.13

2.18

2.35

The price for heating oil is a statewide average; prices in a given geographic region of the state may be considerably higher or lower than this average. This week, within the Energy Office sample, the highest heating oil price ($2.19) was found in one region in the state, and the lowest heating oil price ($1.69) was also found in one region. Also, the statewide average price for propane is based on consumption of at least 900 gallons a year. Households using propane just for cooking or hot water generally pay a higher per gallon price. The table above provides current Maine cash prices in dollars rounded to the nearest penny.

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For Immediate Release

Contact:
Lisa Smith
(207) 624-7445
lisa.j.smith@maine.gov