What Affects Natural Gas Prices?

Natural gas is delivered to New Hampshire and New England from other parts of the country and is transported here through pipelines. The gas supply portion of your utility bill, which is approximately half of the typical residential heating customer’s annual bill, includes the cost of transporting the gas to New Hampshire in addition to the cost of the gas itself.  

To ensure an adequate supply of natural gas for their customers, New Hampshire’s natural gas utilities have contracts for an assortment of more costly supply resources to serve winter period load requirements. These resources include firm pipeline capacity, underground storage, and winter peaking gas supply assets. Winter peaking gas supply contracts are typically structured to meet load requirements during the coldest 10, 20 or 30 days of the winter period and are usually the most expensive resources in a supply portfolio. These assorted supply resources usually include both fixed demand and commodity costs. As a result, the winter period cost of gas rate tends to be more expensive than the summer rate. Without these firm contracted winter period resources, the natural gas utilities would not be able to meet gas demand on the coldest days, however.

Natural gas utilities in New Hampshire also have LNG (liquified natural gas) and/or propane air peak-shaving gas plants located strategically on their distribution systems. These peak-shaving plants include buildings that house the electronic controls and boilers, secure outside yards that provide space for vaporizers that convert liquefied gas supplies into gas vapor, multiple storage tanks for the liquefied gas supplies, and air compressors to push the vaporized gases into the distribution pipes. These peak-shaving plants are used to provide a last source of gas supply to utility customers when all other more traditional sources of pipeline gas supplies are being fully utilized or not available. All costs associated with these peak-shaving facilities are factored into the winter period cost of gas rates, increasing the unit cost reflected on your monthly gas bill. 

Rates for the delivery of natural gas are set by the Public Utilities Commission. The Commission also reviews the gas purchasing activities of your natural gas utility, since the utility is responsible for purchasing gas supply on behalf of its customers.  In the spring and in the fall, your natural gas utility makes a filing with the Commission with a proposed cost of gas for the upcoming six months.  The Commission reviews the information to ensure that the natural gas utility does not make a profit on the purchase of natural gas.