Natural gas futures soared at the end of 2024, reaching nearly $4 per million British thermal units and a two-year high.
Falling temperatures are predicted to increase demand, while uncertainty surrounding the war in Ukraine still threatens the global natural gas supply. But a single spike in natural gas prices, like the one we just saw, is not enough to move the needle on gas heating rates — not immediately, anyway.
The North Carolina Utilities Commission works with utilities, like Piedmont Natural Gas, to adjust rates on an annual basis. The utility estimates the fuel cost and then works with state regulators to tweak that rate periodically during the year. The same goes for Duke Energy, the parent company of Piedmont Natural Gas. If fuel costs exceed the companies’ estimate, the utility recovers that loss the next time it changes rates. If the fuel cost is lower, then the utility compensates by lowering rates.
The company also buys natural gas in advance when the price is lower and stores it as liquid natural gas. This reserve gives the utility a buffer when prices go up. Piedmont Natural Gas manages four natural gas storage facilities: three in the Carolinas and one in Nashville. Each facility houses a single tank that holds 1 billion cubic feet of liquid natural gas — enough to serve more than 15,000 homes for a year.
Piedmont raised rates on Jan. 1. based on last year’s rate case proceedings. The utility won’t adjust rates again until the company’s own projections indicate that they might charge too much … or too little.
But this month’s cold front — and cold weather generally — will be the biggest contributor to a higher heating bill for homes that rely on natural gas.
