Natural Gas Price Hikes Mean Higher Bills for Area Customers | Richmond Free Press
Area residents who cook, heat, cool or otherwise rely on natural gas provided by Richmond are starting to see their bills soar — even though cold weather is still months away.
The main reason: the price of fuel used by customers has almost doubled.
While there may have been some anticipation given soaring prices for gasoline, diesel, and other fuels, the city’s utility department remained silent and provided no prior notice.
Instead, on July 1, the department imposed an immediate 95% increase in fees for buying and bringing natural gas to the city.
Natural gas is measured in cubic feet. Prior to the increase, DPU charged customers 5.7 cents per cubic foot to cover the cost of fuel. The new price customers must pay is 11.136 cents per cubic foot, or nearly 6 cents more.
It may not seem like much, but it translates into a much bigger bill.
Based on DPU’s estimate that the average residential customer uses 7,000 cubic feet of gas per month over the course of a year, the total bill goes from about $100 per month to about $140 per month, or a total increase of 40%.
Along with the cost of fuel, the bill also includes a fixed charge for the service, a distribution charge for the pipes needed to carry it around town to homes and businesses, and taxes.
The only consolation: natural gas will always be much cheaper than the cost of gasoline and diesel to power vehicles.
Currently, a gallon of gasoline costs about $4.80. If natural gas were measured in gallons, the cost of natural gas would be $2.28 per gallon, even with the increase imposed by the DPU.
But that’s not helping families already struggling to pay rent and keep food on the table who now have to absorb a steep rise in their utility bills.
DPU officials said they had no choice, given soaring wholesale prices in Louisiana and other states that are home to major producing areas.
The fuel levy, also known as the gas purchase levy, is designed to cover the cost the gas utility faces to acquire the fuel without generating a profit, officials said.
According to the U.S. Energy Information Agency, natural gas has risen sharply due to reduced supply, increased demand from electric utilities that have switched from coal to natural gas to generate of electricity, and the relocation of more of the available supply to exports to Europe to replace Russian natural gas in response to the war in Ukraine.
The EIA predicts that it could take a year for supply to increase to match demand and begin to lower prices.
DPU said it would switch from quarterly to monthly pricing in a bid to take advantage of any price drops and reduce the amount customers have to pay.
This change, however, could mean that any further increase in the cost of fuel would be passed on to customers’ bills more quickly.