CFU Tracking Natural Gas and Electric Market Costs
on Thursday, May 26, 2022
U.S. natural gas prices have been at historic lows since hydraulic fracturing (fracking) unlocked new supplies over a decade ago. The graph above illustrates the Henry Hub natural gas spot price for the past 24 years from the U.S. Energy Information Administration. While we are currently experiencing an increase in natural gas costs, average prices were much higher in the early 2000s.
Cedar Falls Utilities cautions customers that high natural gas market prices will continue to impact gas and electric bills.
Natural gas market prices have more than doubled from a year ago. While there is no single answer to why market prices are up, there are a few key factors.
Natural gas supply is down, and low supplies of a commodity tend to drive market prices higher. Current supplies of natural gas are lower than normal because of long and short-term factors.
Low market prices for crude oil over the past decade have limited investment in new oil drilling sites, cutting down on the amount of gas produced.
U.S. production of natural gas fell sharply during the pandemic. Production has restarted, but it has been growing slowly.
In addition, Russia’s invasion of Ukraine has sent Europe’s gas prices sharply higher. The U.S is now sending more of our gas production overseas in the form of liquified natural gas.
The market cost of natural gas flows through to customers in the Purchased Gas Adjustment (PGA) on the gas portion of the utility bill. In the PGA, CFU passes on to customers only the cost for natural gas and related pipeline fees without markup.
Natural gas prices are forecasted to remain high throughout the year. While most Cedar Falls Utilities customers use less natural gas in the summer when furnaces are off, customers should prepare for the impact on summer gas usage and future heating seasons.
Electric Costs this Cooling Season
Natural gas market prices can also affect electric bills. A growing portion of our country’s electricity is generated by natural gas. So, when natural gas prices are high, electric market prices also tend to go up. Electric market prices are forecasted to be significantly higher than recent years this summer.
Energy market costs are reflected on utility bills in the Energy Cost Adjustment (ECA). In the ECA, CFU passes on to customers only the cost to produce or purchase electricity without markup.
The good news is that CFU owns generating assets that can help control electric costs for customers when market prices are extremely high. CFU continues to own and operate the Streeter Station power plant in Cedar Falls. In addition, CFU owns shares of large coal-fired power plants in western Iowa and maintains a community solar array. Plant ownership reduces the amount of energy CFU must buy to supply to customers when prices are extremely high.
Take Steps to Make Your Home More Efficient
There are steps you can take to reduce energy usage and save money. CFU offers cost-sharing rebates to help customers install energy-efficient equipment and make insulation and other thermal envelope improvements. Learn more at cfu.net/save-energy.
Resources are available if you need assistance with energy costs. Cedar Falls Utilities encourages any customer facing financial hardship to call Customer Service at 319-268-5281.
Sign up for Budget Billing
Customers can also sign up for CFU’s budget billing plan to level out the seasonal ups and downs of heating and cooling costs. This is accomplished by dividing a customer's estimated annual utility charge into 12 equal payments.
For more information and to sign up, call Customer Service at 319-268-5280 or email email@example.com.