×

Dominion: Gas price up, but below average

WARREN — Dominion East Ohio leaders said prices will be higher this year than last, but still lower than the five-year average.

Average monthly prices will likely be higher than last winter’s unusually low prices, which resulted from a unique combination of warmer-than normal weather, increased production from shale areas in Ohio and other states and historically high storage levels, Jeff Murphy, Dominion East Ohio vice president / general manager, said.

“Last year was an anomaly,” Murphy said. “Record storage levels and strong natural gas production collided with reduced demand created by much warmer-than-normal weather. This caused market prices to crater to decades-plus low levels. It was a classic case of the law of supply and demand in action.”

Murphy said a review of current New York Mercantile prices for January through March 2017 indicates that average monthly natural gas prices would be in the “low-to-mid-three dollar range per thousand cubic feet (mcf).”

Murphy notes that those NYMEX prices can, and often do change, based on weather and other market factors. However, based on current conditions, these price projections are still lower than Dominion’s five-year winter price average of $3.806 per mcf, covering the 2011-12 through 2015-16 heating seasons.

For example, customers on the company’s Standard Choice Offer (SCO) or Standard Service Offer (SSO) rates will see a rate of $3.182 per mcf, effective Dec. 13. Though higher than the previous December rate of $2.226 per mcf, the December 2016 rate is still lower than the $4.45 / mcf December average for the years 2011-2014, Murphy said.

Although natural gas storage levels are high, reduced drilling brought about by low prices and an expected return to colder seasonal temperatures, has resulted in higher, though still moderate, market prices, Murphy added.

Additionally, he said, the location of Dominion East Ohio’s system, astride Ohio’s major Utica and Marcellus shale production regions, is helping moderate price increases for customers.

“Our location so close to some of the fastest-growing production areas in the country provides greater supply reliability and ensures that Dominion East Ohio can provide sufficient natural gas when our customers need it most,” he said.

The company’s SCO, available to choice-eligible residential customers who have not already chosen a specific Energy Choice or governmental aggregation supplier offer, is a combination of the NYMEX monthly closing price and a Retail Price Adjustment, which is set in an annual auction under Public Utilities Commission of Ohio supervision. For the first time, this year’s auction produced a price adjustment of minus 5 cents per mcf. Murphy attributed this result to an abundance of regional shale gas resources and limited pipeline infrastructure to carry gas out of the region to other parts of the country.

business@tribtoday.com

NEWSLETTER

Today's breaking news and more in your inbox

I'm interested in (please check all that apply)
Are you a paying subscriber to the newspaper? *
     

COMMENTS

Starting at $4.85/week.

Subscribe Today