March natural gas prices lowest since December 1994

Cleveland Plain Dealer

John Funk

February 26, 2016

CLEVELAND, Ohio — Dominion East Ohio and Columbia Gas of Ohio customers who subscribe to their utility’s monthly variable rate will see the lowest prices in years next month.

Called the Standard Choice Offer, or SCO, the monthly rate is based on the industry’s monthly commodity price, which is set near the end of every month for gas delivered in the following month.

Created in 2009 after three years of a similar program, the SCO has allowed consumers to take advantage of the low prices created by enormous natural gas surpluses produced by horizontal drilling and hydraulic fracturing of shale deep under Ohio, West Virginia and Pennsylvania.

SCO customers buy the gas from independent suppliers chosen by Dominion and Columbia through competition monitored by the Public Utilities Commission of Ohio. The winning suppliers have agreed to charge SCO customers the same price, which typically is lower than what they charge other customers who sign contracts.

Contracts for gas that will be delivered in March were set Thursday on the New York Mercantile Exchange at just under $1.71 for the amount of energy in 1,000 cubic feet, or 1 Mcf, of gas.

The last time commodity gas prices were this low was in December 1994, U.S. Energy Information Administration records show.

What it means is that Dominion SCO customers will see a gas price in March of $1.73 per Mcf — down from the current price of $2.21 per Mcf.

That is the lowest price since the PUCO launched the SCO program in 2009 and may be lower than what Dominion charged before the PUCO created the SCO program.

Comparing SCO monthly prices with historic prices is difficult, however, because in the past the utility itself bought and sold gas and charged prices regulated by the PUCO that included variable costs and adjustments. The utilities were not allowed to make money from the sale of the gas. Profits were based on delivery charges.

Columbia SCO customers in March will see a gas price of 30 cents per 100 cubic feet, or $3.00 per Mcf — down from the February price of 34.790 cents per Ccf.

Columbia’s Ohio pipeline system does not link directly to the shale gas wells in the state’s eastern counties, and its SCO price reflects interstate pipeline fees.

Dominion’s Ohio pipeline system carries most of Ohio’s shale gas at this point.