Gas companies to give reduction in natural gas prices

Duke, Vectren customers see reduced bills

Natural gas users in the region can expect a break in their bills as prices remain at historic lows due to a mild winter and a large supply.

Vectren Energy Delivery of Ohio this week joined Duke Energy Ohio when it announced an average monthly reduction of 10 percent for gas customers who use the company’s budget billing plan.

Under Vectren’s budget billing, a customer’s estimated annual gas service costs are spread out in equal monthly amounts for the year. The drop will start being reflected in bills for August, said Colleen Ryan, president of Vectren Energy Delivery of Ohio.

Duke Energy Ohio cut its residential bills by about 4.5 percent.

As a result, a typical residential customer who uses 1,000 kilowatt-hours of electricity a month and buys electric supply from Duke Energy Ohio paid about $118 a month starting with the June bill, down about $5.55 from May, the company said.

Hydraulic fracturing drilling techniques have strengthened supplies of natural gas and forced prices to dramatically drop. Weather forecasts also play a role. Last fall, it was thought that the weather phenomenon El Nino would mean a comparatively warm winter.

“In our footprint, temperatures averaged 20 percent warmer-than-normal which resulted in customer usage being much less than the normal projected usage projected in budget bills,” Vectren spokeswoman Natalie Hedde said. “The warm winter drove natural gas pricing down to the lowest level since 1999.”

But since then, she added, natural gas prices have rebounded due to a warm summer which has “dramatically increased the demand for natural gas for power generation.”

Dayton Power & Light’s gas service was divested to Vectren in 2000. Vectren has 314,000 customers in a 17-county region.

Duke spokesman Thomas Williams called today’s gas prices “amazing.”

“It’s been good news for our customers and the company across the board,” he said.

At Duke, about 26 percent of its power generated in 2015 was natural gas and 33 percent was coal. But coal use is dropping, Williams said. The company has about 500,000 customers in Southwestern Ohio and northern Kentucky.

Those trends continue to evolve. Williams said Duke shut down over 40 coal units across its fleet since 2011.

There are environmental benefits, with lower sulfur dioxide and other emissions, along with lower water use, because gas plants use less water, he said.

“Clearly, that’s the main driver,” Williams said of fracking. “Shale gas is what I would call it.”

Duke is the nation’s second largest user of natural gas. Last October, the company announced a plan to acquire a natural gas distribution company, Piedmont Natural Gas, in a $6.8 billion deal. Duke hopes to close on that by year’s end, Williams said.

Wallace Tyner, professor of agricultural economics at Purdue University, said the main factor at work is fracking.

When drillers drill for oil, they often get gas, sometimes called “associated gas,” Tyner said. “They have to do something with it.”

Warm weather last winter means stores are full, even this summer, Tyner said. “So now, you have an abundance of gas with no place to go.”

Also: the United States exports very little gas, which keeps our supplies higher.

Shana Eiselstein, a spokeswoman for Columbia Gas of Ohio, which has 35,000 customers in the Springfield area, said her company will adjust its budget billing rates soon.

“Customers will actually see an adjusted budget amount for the next 12-month period,” she said, adding later in an interview: “Our customers are certainly benefiting from stable- to low-natural gas prices.”