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.”