Natural Gas Pricing Components

There are multiple components that make up your monthly natural gas bill. Understanding these components, as well as what your supplier can impact is important.

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Supply

Natural gas is made available for purchase on the open market, which can be competitively purchased on your behalf by a direct supplier, such as IGS Energy.

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Distribution

Distribution is handled by your utility, who gets the natural gas to your business.

Line Breaks Gas

Supply

When looking at the supply portion specifically, the NYMEX and transportation are the most influential when it comes to your overall natural gas costs.

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COM_icon_dot7 NYMEX   

The market, or NYMEX, is the main component, comprising 60-65% of the overall price. Prices change throughout the day (sometimes abruptly) in response to significant events that impact supply and demand for natural gas.

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COM_icon_dot1 Basis   

Basis comprises up to 5% of the overall natural gas price. This is the price difference between the Henry Hub in Louisiana (a natural gas pipeline that’s the official delivery point for futures contracts on the NYMEX) and a given market. If the given market’s price is cheaper than the Henry Hub, a credit may be given. These prices are subject to change monthly or even multiple times daily.

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COM_icon_dot2 Transportation   

Transportation is the other main component, comprising 15-20% of the overall price. It ensures there is sufficient space on interstate pipelines to provide natural gas on the coldest day of the year. Rates vary by pipeline, but typically don't change much annually.

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COM_icon_dot3 Other Components   

There are several components that suppliers have no control over, which comprise up to 10% of the overall price. These include components such as line loss, balancing and pooling charges, and BTU conversion.

Fixed Float Hybrid

Managing the Components

Our team will develop a strategy that may fix or float components, or a hybrid of the two. By customizing a plan for your business, we'll help you balance market opportunity with price predictability.

Most Popular Strategies

With the NYMEX and transportation as the most influential cost components, here are some of the common ways we combine these factors to deliver a customized natural gas solution.

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All-In Rate

Benefit from price certainty with a steady rate through the duration of your term.

 

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NYMEX Plus

Float your energy price with the market while locking in all other costs to benefit your bottom line.

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Regional Index Plus

Float your energy costs and basis (transportation charge) and lock in all other costs for the greatest market opportunity.

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Managed

Minimize risk with this hybrid product that's ideal for customers with small to medium usage profiles.

 

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Partial Fixed

Manage your exposure to market changes with this hybrid product that's designed for businesses with large usage profiles.

 

Energy Usage Profile

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