Natural Gas Market Update
on Friday, January 27, 2023
In December, CFU asked natural gas customers to conserve gas during a market price spike. CFU appreciates the efforts customers made during that time to use less natural gas and help our community. Thankfully, prices quickly returned to normal and conservation efforts were only needed for a short time.
We want you to understand how utilities buy natural gas, our efforts to guard against price spikes and how we will respond if this occurs again.
The short-term market price spike in December was caused by extremely cold temperatures across Western states. The cold temperatures drove up demand across the West and Midwest and significantly increased natural gas prices.
During the December event, natural gas prices were up to three times the normal December price and threatened to go much higher.
Natural gas markets across the country have shown increased and unexpected volatility in recent years. Residents may remember Winter Storm Uri in February of 2021 and the unprecedented natural gas prices we experienced. The December 2022 event was not that extreme and did not have that kind of utility cost impact.
Natural gas market prices impact customers because there is a variable charge on utility bills that reflects the market price of gas and the cost to transport the gas to Cedar Falls. The Purchased Gas Adjustment (PGA) fluctuates up and down based on the wholesale price CFU pays for the gas it provides to customers.
CFU is working on your behalf to purchase gas at the lowest possible overall price and shield customers from price volatility.
Gas is purchased both on contract and in a daily market. The contracts CFU has in place lock in a portion of our gas supply ahead of time at a fixed price. These contracts and other purchasing agreements CFU has used in the past provide a hedge or “insurance” against extreme price fluctuations, but that gas is often more expensive than what can be purchased in the daily market.
There is a portion of natural gas that is used in Cedar Falls on extremely cold, high demand days that is difficult and very expensive to buy ahead. Overall, utility bills typically remain lower by continuing to buy some gas daily.
If market prices spike again in the future, CFU may call on customers to help conserve. If this occurs, CFU will reach out through public and social media communications. We may also contact customers through direct, automated messaging in the form of a text message or notification through the CFU2Go app.
CFU will also work with commercial and industrial customers to limit natural gas used in manufacturing or other business processes.
Customers should make sure cell phone numbers are updated in utility records. To check or update the phone number listed in your CFU account, call customer service at 319-268-5280. Or login to your online utility account and check your “My Profile” information.
Going forward CFU will continue to control the costs we can, protect customers as much as possible from natural gas market volatility and keep you informed about the impact of energy markets on utility bills.