Natural gas prices low, offer Atlanta consumers chance to lock in

Channel 2’s Consumer Advisor Clark Howard explains how to find out if you’re eligible.

For consumers in Georgia’s $8.5 billion natural gas market, this may be a good time to think about “locking in” a price.

Among the 14 natural gas marketers in the state, there is a range of prices. Because natural gas is a commodity, the price rises and falls through the year, sometimes dramatically. Residents can flow with the highs and lows of the market throughout the year. Or they can try to sign a long-term contract when the prices are near their lowest.

Which is now.

Natural gas is used for cooking, heating and especially — as spring turns to summer — for air conditioning. Prices are at their low as use ebbs. (AJC file photo)

icon to expand image

"Right now, there is low demand for natural gas and a low price," said Vernon Trollinger, an analyst for GeorgiaGasSavings.com, a year-old consumer website operated by Houston-based Electricity Ratings, LLC. "Prices will start rising at the end of this month. And as the summer winds on, we'll use more gas and the price will keep going up."

Last year, the price of natural gas rose 38 percent between May and August, according to the U.S. Energy Information Administration.

Natural gas is used for heating, cooking and electricity. The month with the most natural gas use in Georgia is January, which is also the most expensive month, according to data from the Georgia Public Service Commission and the EIA.

The average Georgia customer in January spends $218.67 on natural gas – compared to $63.61 in May.

Natural gas use is measured in therms, each therm being the equivalent of 100,000 British thermal units, or BTUs. The average Georgia customer uses 711 therms in a year, according to the Georgia Public Services Commission.

As with gasoline, what the consumer pays is affected by demand, supply, expectations, logistics and weather – especially hurricanes that tear through the Gulf of Mexico and tend to jack up the market price for natural gas.

But consumers who lock in a rate pay that rate through the life of the contract. Lock in a low rate, you get that come hell or (literally) high water.

“You could spend hundreds of dollars more on a variable rate plan,” Trollinger said.

The best fixed rate available now is 39.9 cents per therm and a customer could lock that rate in for a year or even two.

Consumers that took the standard variable plan in January when the price was $1.19 per therm would pay about $640 for natural gas during the first four months of the year, Trollinger said.

In contrast, the average price for a fixed plan in January was just 62.9 cents per therm and so the first four months of the year would have cost only $407. And a consumer who shopped around for the lowest fixed rate would have saved even more, he said.

Some consumers fear getting trapped in buyer’s remorse – picking what seems to be a low price and then seeing a better bargain later.

“If you lock in a price say, for 12 months and then, three months in, you see a much better rate, most plans will let you go,” Trollinger said. “But keep in mind, some will have an early termination fee of $100 or $200.”


Natural gas prices rise through spring into summer

Past 12 months, average price per therm

January: 86 cents

February: 93 cents

March: 95 cents

April: $1.10

May: $1.28

June: $1.56

July: $1.73

August: $1.77

September: $1.64

October: $1.30

November: 99 cents

December: 90 cents

Source: Energy Information Administration, GeorgiaGasSavings.com, staff research

Total natural gas bill

For the average Georgia customer

January: $218.67

February: $173.24

March: $121.11

April: $75.47

May: $63.61

June: $57.73

July: $57.01

August: $57.71

September: $57.91

October: $71.94

November: $121.04

December: $161.75

Source: Energy Information Administration, GeorgiaGasSavings.com