Natural Gas Contracts Help Mitigate Extreme Cold Impact

Cedar Falls Utilities customers can expect recent extreme cold temperatures to have a moderate impact on gas bills.

When extreme cold impacts a large swath of the country, demand for natural gas quickly rises. When demand rises, so does the market price of natural gas. 

However, average natural gas market prices have been lower this heating season, which helps keep your total costs lower. Based on current projections, we expect natural gas bills during this winter heating season to be lower overall than the previous two years. 

Like many utilities, CFU has a Purchased Gas Adjustment (PGA) on utility bills that reflects the market price of gas. That charge fluctuates up and down based on the wholesale price CFU pays for the gas it provides to customers.  

The cost of the gas commodity is a pass-through to customers. CFU does not mark up what we pay for natural gas. 

We work on customers' behalf to keep gas prices as low as possible. CFU uses a combination of long-term contracts, hedges and preset monthly natural gas prices to minimize the fluctuations and large swings in the daily gas market. 

A predetermined monthly natural gas price is used to purchase CFU’s predictable natural gas supply based on normal temperature conditions for the month.

Using these methods, we lock in a low monthly price for a significant portion of the gas we buy to supply to the community.

On really cold days, customers use twice as much natural gas as they do on an average winter day. Many furnaces must run 100% of the time when it’s bitter cold to keep homes at a comfortable temperature. 

The extra gas needed to heat customer homes and businesses is purchased from the daily market. 

The daily price is more variable in nature and goes up and down based on the supply and demand for natural gas across the U.S. Purchasing extra gas every month to cover extreme temperature swings is cost prohibitive and would be even more expensive than the daily gas market costs, even during extreme temperature swings.         

Small behavioral changes throughout the year and energy efficient home upgrades can help you save money on your natural gas bill. Learn more at cfu.net/energy-tips.