The Major Components of your Natural Gas Price are:
Interstate Pipeline Transportation Charges
Local Gas Utility Delivery Charges
1. Commodity Cost
The extraction of natural gas from the ground forms the Commodity Cost. The wholesale price of natural gas is determined by trading on the New York Mercantile Exchange (NYMEX), as well as at regional “hubs”.
2. Interstate Pipeline Transportation Charges
Natural gas originates in Texas, Louisiana and the Gulf of Mexico. Two main interstate pipeline transmission companies, Florida Gas Transmission (FGT) and Gulfstream Natural Gas System, charge a fee for the transportation and delivery of natural gas supplies from the gas production areas to the local utility. The interstate transmission pipelines are regulated by the Federal Energy Regulatory Commission (FERC).
3. Local Gas Utility Delivery Charges
The natural gas is delivered from the city gate to the customer by a local gas utility company. This transportation/distribution charge is a variable charge based on the customer’s usage.