Can someone provide some insight into what’s going on with the price of natural gas. I just moved in with a friend of mine last March, each month now our rent has been raised due to the rising cost of gas. The gas bill is paid by the landlord and tacked on to our rent. It used to be $50/bi-monthly. (Which made sense as Keyspan bills bi-monthly.) Sunday night, my roomie informs me that our rent is going up another $100/month. Because of the cost of gas. Now this just isn’t making anysense to me. Our heating is electric, and our place is perpetually cold anyways. The only thing outside of the cooker that could possibly be gas is the hot water heater. Now this is a two flat brownstone and $300/month seems like a lot for just two cookers and a hot water heater.
I’ve checked the price trends on NYMEX and it seems to me that natural gas has steadily gone down in price since last November. Any NY/NJ Dopers noticed a sharp rise your Keyspan bill? Am I missing something here or are we getting the shaft?
I forgot to mention that last month, the landlord said that gas would be $50/EVERY month. Now it’s $150/mo.
This is a bit of a WAG, although not completely WA. The rates set for natural gas has many major componenets, I will dicuss the two major ones related to the cost of NG itself (other costs are administrative, maintainence, capital).
Gas comanies go to the regulators looking to set rates based on projections of usage and cost of NG. If the regulators give apporval those rates are set and they collect that rate for every unit of gas consumed. These rates generally will not be changed during the year. They try to be accurate, with regulatory oversight on the forward looking, because they don’t really want to bother would paying back overcollections or recovering undercollections. But no matter what there wil be a difference between what they collected and what they paid for gas since their forecasts are not 100% accurate. So if there was an undercollection over the year it would be rolled into the next years rate. So for 2006 you would have a possible rate increase from both high projected costs for 2006 and an undercollection for 2005. The latter very likely happened because oil price rises and the two Hurricanes in the Gluf sent NG prices soaring.
So while you may see NG prices have gone down since November, your rate may still be higher than before for the two reasons I mentioned.
Now I must caveat this that I do not know if this is really how it works in NY/NJ, but it sounds good 