Stored gas purchased at low prices may protect customers against price spikes
NEW HAVEN — UIL Holdings Corp. and its natural gas-distribution subsidiaries — the Southern Connecticut Gas Co., Connecticut Natural Gas and the Berkshire Gas Co. of Massachusetts — expect gas bills to remain relatively stable this winter.
The companies have portfolios of firm capacity that access ample and low-cost gas supplies, including supplies from the Appalachian basin, where the discovery of vast stores of gas in the Marcellus Shale formation has improved the domestic supply picture. The companies have supply commitments arranged and have been storing natural gas purchased at low, off-season prices, according to John P. Rudiak, senior director of energy supply for UIL’s Connecticut gas operations.
That means customers should continue to be largely insulated against significant price increases, even if the spot market cost of natural gas delivered in New England rises sharply during the heating season, Rudiak added.
“We’re filling our gas storage with the lowest-price gas that we’ve put into storage in years,” Rudiak said. “That gas will be available for withdrawal this winter for our customers.”
Stored natural gas can account for almost half the consumption of CNG and SCG firm customers during the winter heating season, Rudiak said. The commodity cost of natural gas is reflected on customers’ bills under the PGA (Purchased Gas Adjustment) line item.
Pittsfield, Mass.-based Berkshire Gas issued a similar forecast. “We’re optimistic that winter pricing will remain stable, comparable to last year,” said Chris Farrell, Berkshire’s director of corporate communications and government relations.
Meanwhile, UIL officials said they expect to be able to comfortably meet their customers’ gas needs this winter, despite recent reports about constraints in the transmission system.
“Even as we continue to grow our system in Connecticut and bring natural gas to towns and neighborhoods that did not have it before, we have firm capacity contracts in place to guarantee that both our new and existing customers have access to this inexpensive and environmentally friendly fuel,” said Robert Allessio, president of SCG and CNG.
UIL’s natural gas distribution companies are supplied by major transmission pipelines that bring in natural gas from regions where it is produced, including the Appalachian basin and Canada. The companies supplement these pipeline supplies with reserves of liquid natural gas stored at local facilities, as well as large reserves from underground storage facilities in several states.
In addition, the companies offer larger industrial and commercial customers the opportunity for lower rates if they are willing to switch temporarily from natural gas to other fuel sources at times when demand is unusually high. This helps level out short-term spikes in demand for natural gas during certain peak periods, ensuring sufficient supply.