Beacon Journal columnist
Dominion East Ohio announced that the price for natural gas for customers on the Standard Choice Offer (SCO), the monthly variable price with a provider assigned by the utility and following a state-approved formula, is going up.
It will be $6.16 per thousand cubic feet (mcf) for the month starting Friday.
That’s up from $5.01/mcf in January and $4.42/mcf in December.
This is occurring as we continue through wintry conditions in Northeast Ohio. As a result of those frigid temperatures a few weeks ago, the price of natural gas on the New York Mercantile Exchange spiked as the industry worried about a dip in supply.
When reports later said supply wasn’t impacted as much as feared, prices fell. The Wall Street Journal reported that the prices plunged the most in nearly four years in one day.
Neil Durbin, spokesman for Dominion, said it was unfortunate that the price was high on the day the SCO for the following month was determined. It has since fallen.
For historical perspective, Durbin noted that the last time the SCO/SSO rates were more than $6/mcf was in March 2010. The all-time peak was $14.55/mcf in July 2008.
The February rate is 23 percent higher than the January rate and 61 percent higher than the price of $3.83/mcf a year ago. Remember, before this, we’ve been at historical lows. With the new February SCO rate, the average residential customer bill will be $130.31, up $26.04 or 25 percent from $104.27 a year ago.
Some customers might wonder if it’s worth jumping off the SCO and locking into a fixed rate. Others might have agreed to be in an aggregation. But keep in mind those rates take two months to go into effect, so your new prices probably wouldn’t be in force by now.
As I’ve said before, the fundamentals of the decision to be on the SCO remain the same — supplies have generally been high with additional production to keep prices low. I will continue keeping a close eye on prices.
A recent Wall Street Journal story reported that energy companies are still pumping lots of natural gas. Aaron Calder, an analyst for natural-gas consultant Gelber & Associates, told the Journal, “the strong production is keeping people from freaking out. Nothing fundamental changed in the market. It just got cold.”