Kentucky residents who heat their homes with natural gas will see much lower prices at the start of the 2015-2016 heating season than they did a year ago, according to the Kentucky Public Service Commission.
Gas prices are down by more than a third from this time last year, and have fallen by more than two-thirds from the peak reached in 2008.
On average, Kentucky customers can expect their total gas bill to be about 21 percent smaller this November than last, based on consumption of 10,000 cubic feet of natural gas. The average total bill for 10,000 cubic feet, including base rates, is projected to be about $83.74.
That is down about $23 from last year and a decrease of more than $67, or about 44 percent, since November of 2008. The lower cost of natural gas has more than offset increases in base rates over that time.
Changes in individual ratepayer bills will vary by company and customer usage.
Wholesale prices over the last six years have not approached the peak prices seen during a sharp upward turn in 2008. Prices declined even more abruptly during the economic downturn in 2009, and have fallen since then.
The commodity cost of natural gas is passed through to consumers on a dollar-for-dollar basis by local distribution companies.
By federal law, natural gas prices are not regulated at the wholesale level and generally fluctuate with supply and demand. Under Kentucky law, gas companies are entitled to recover the wholesale cost of the gas delivered to customers, including the fees they pay to interstate pipelines to transport the gas to their retail distribution systems. Companies are not allowed to earn a profit on their gas commodity costs. The companies’ gas cost adjustments are reviewed by the Public Service Commission to make sure they accurately reflect the cost of natural gas.
The five major natural gas distribution companies in Kentucky are Atmos Energy, Columbia Gas of Kentucky Inc., Delta Natural Gas Company Inc., Louisville Gas and Electric Company and Duke Energy Kentucky Inc. Together the five companies serve more than 750,000 customers in Kentucky and deliver about 176 billion cubic feet of gas annually.
About 44 percent of Kentuckians heat their homes with natural gas. For those who heat with propane (10 percent) or fuel oil (3 percent), prices are expected to be lower than last year, according to the U.S. Energy Information Administration.
The 39 percent of Kentuckians who use electric heat are likely to see somewhat higher bills on average this winter, in part because two of Kentucky’s largest electric utilities had a rate increase in the last year.
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