It’s all based on market timing and when the prices of the commodity are set, according to Andrea Stass, spokeswoman for Union Gas.
“There is plenty of natural gas,” she said.
Let’s go back to last winter, the conditions of which were worse than the frigid cold of the past couple of months.
Stass said natural gas companies forecast a certain level of supply based on what they thought weather conditions would be.
But “because it was basically the coldest winter probably in a decade the amount that they had planned for wasn’t sufficient.”
So companies like Union Gas “had to go and buy more supplies, so that did drive up the price,” Stass said.
It’s not that there’s a shortage of supply but it’s ”the speed at which it’s produced and actually brought into where it’s needed” that affects price.
By spring of 2014 the demand drove up the price “about 28 per cent” she said.
Prices are reviewed quarterly.
“We review our price every three months, we change our price every three months to reflect the market price of gas and what it cost us to buy it.”
By October however, the price came down - by 9 per cent.
And in January it came down again - “very small - less than 1 per cent,” Stass said.
Prices will be adjusted again in April, which could hold good news.
“Whether that will bring us back to where we were before last year’s winter event I don’t know but we think it will be close,” she said.
Stass said consumers should look at the first two lines of their bill to estimate changes in commodity prices.
There’s the basic cost and there’s the price adjustment.
“So you have to add those 2 elements together to what you’re paying for your commodity,” she said.
One line is the forecast for what the price will be and the other is the adjustment for what it actually was.
“Because we set the price before we charge you for it,” she said.
“There’s always a difference between what we believe it’s going to cost and what it actually costs.”
Stass said prices are expected to go down because utilities have planned for the harsher weather - including this year’s severe temps - and there is more supply in the pipeline.
But over the long term gas is cheaper today than what it was five years ago, largely due to new technology like fracturing.
“The price has significantly declined because with this process we have access to more supply and with more supply the price comes down,” she said.
Stass said the price is actually “the lowest it’s been in 10 years,” a saving of almost $800 for an average household with natural gas furnace and water heater and house measuring 2200 sq. ft.
That’s compared to what consumers would have paid five to seven years ago, she said.