The monthly price for customers who have chosen Dominion’s Standard Choice Offer (SCO) or those who don’t choose their own natural gas supplier is dropping to a 13-year low.
Beginning Feb. 13, the SCO, or the Standard Service Offer (SSO), which are identical, will be $3.68 per thousand cubic feet (mcf). That’s a 40-cent or 9.8 percent decrease from the January rate of $4.08/mcf. It’s $1.84 or 33.3 percent cheaper than a year ago.
The last time Dominion East Ohio’s natural gas costs were this low was November 1998, when customers paid $3.67/mcf, said Dominion spokesman Neil Durbin.
And the outlook is for prices to remain low, said Jeff Murphy, Dominion East Ohio managing director for commercial operations, who also oversees the regulated utilities’ Customer Choice Program.
“The amazing thing is while prices will go up and go down a little bit, what folks are saying is this is going to last for quite some time. Perhaps not these truly low levels, but muted levels,” said Murphy.
Murphy cited the latest report from the U.S. Energy Information Administration showing wholesale prices of natural gas are expected to remain below $5/mcf, not adjusted for inflation, until 2023.
“It shows literally you’re talking a decade” of potentially low prices, said Murphy.
The biggest reason is shale development, some of which is in Ohio’s own backyard.
There is some talk that the U.S. could eventually become a net exporter of natural gas, he said.
“We’re in a range where those low gas prices seem to be here to stay,” he said.
For February, the average residential bill for customers paying the SSO/SCO rate will be $105.43, down $48.97, or 31.7 percent, from $154.40 in February 2011.
Residential customers pay the same usage-based charges (to deliver gas to a residence) and monthly service fee, regardless of whether customers choose their own supplier or stay with Dominion. That flat fee, approved by the Public Utilities Commission of Ohio, is $20.37.
The SSO/SCO price changes each month and is set according to a state-approved formula based on New York Mercantile Exchange settlement prices on the third to last business day of the previous month. Currently a $1/mcf charge is added to that price.
The next auction to determine next year’s “adder,” beginning with April bills, is Feb. 28.
Murphy said the auction price is determined by companies that bid in the auction, based on what it costs them to move gas to this area and the price they’re paying.
Indications are that the auction adder price is unlikely to go above the $1/mcf, and could even decrease, Murphy said.
Betty Lin-Fisher can be reached at 330-996-3724 or firstname.lastname@example.org. Follow her on Twitter at www.twitter.com/blinfisher and see all her stories at www.ohio.com/betty .