Does more supply fix pricing problems? I always thought a fundamental tenet of capitalism is supply and demand. In Westchester County, as I reported in , and as reported here, Con Ed made a deal with a large Fracker and the moratorium on new natural gas supply ended in Nov 2023. Now we can get gas generators, instant hot water heaters and build new homes with natural gas service. So with all the new supply, what happened to my natural gas utility rate?
I’ll give you a guess……1,2,3,4,5 — It went up! How much, and what changes? Let’s compare my Nov bill from 2023 to 2024 and see. There are three main factors that drive the natural gas prices – gas supply charge, gas delivery charge and the mysterious gas adjustment rate. The gas adjustment rate is a rate tacked onto the gas delivery bill that is very sketchily described. No mention of it in this ConEd rate report, and this explanation describes it as “adjustments for miscellaneous costs and credits.”
So of the three gas utility rates, each increased substantially from the same bill last year.
- Natural Gas Supply increased 17% year over year from 45.30c/therm to 54.604/therm
- Natural Gas Delivery increased rose 7% year over year from 138c/therm to 148.6c/therm
- Natural Gas Adjustment rate increased 44%!! from 22.667c/therm to 41c/therm
- The gas delivery basic charge increased 8% from $25.13 to $29.64
Overall, the combined rate of supply, delivery and all taxes and fees for natural gas supply increased 8% from $2.93 to $3.19. Natural gas delivery accounts for 82% of my natural gas bill.
So the answer to my initial question is squarely NO – increased supply doesn’t mean prices will decrease. What I really see is that increased supply is VERY expensive and outpaces the short term gains of increased supply. Will this stay same over time as costs are amortized and depreciated? I have no idea but I’d say all past data leads me to believe that prices will not fall.
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