CLEVELAND, Dec. 2, 2016 /PRNewswire/ -- Abundant regional shale natural gas supplies will help Dominion East Ohio customers face an expected return to colder temperatures this upcoming winter, at prices projected to be lower than the average of the past five heating seasons, officials say.
Jeff Murphy, Dominion East Ohio vice president and general manager, says a review of current New York Mercantile prices, for January through March 2017, indicates that average monthly natural gas prices would be in the "low to mid-three dollar range per thousand cubic feet (mcf)."
Murphy notes that those NYMEX prices can, and often do change, based on actual weather and other market factors. However, based on current conditions, these price projections are still lower than Dominion's five-year winter price average of $3.806/mcf, covering the 2011-12 through 2015-16 heating seasons.
Average monthly prices will likely be higher than last winter's unusually low prices, which resulted from a unique combination of warmer-than normal weather, increased production from shale areas in Ohio and other states and historically high storage levels, Murphy says.
For example, customers on the company's Standard Choice Offer (SCO) or Standard Service Offer (SSO) rates will see a rate of $3.182 per mcf, effective December 13. Though higher than the previous December rate of $2.226/mcf, the December 2016 rate is still lower than the $4.45/mcf December average for the years 2011-2014, Murphy points out.
"Last year was an anomaly," Murphy says. "Record storage levels and strong natural gas production collided with reduced demand created by much warmer-than-normal weather. This caused market prices to crater to decades-plus low levels. It was a classic case of the law of supply and demand in action."
Even though natural gas storage levels are very high, reduced drilling brought about by low prices and an expected return to colder seasonal temperatures, has resulted in higher, though still moderate, market prices, Murphy says.
Murphy adds that the location of Dominion East Ohio's system, astride Ohio's major Utica and Marcellus shale production regions, is helping moderate price increases for company customers. "Our location so close to some of the fastest growing production areas in the country provides greater supply reliability and ensures that Dominion East Ohio can provide sufficient natural gas when our customers need it most."
The company's SCO, available to choice-eligible residential customers who have not already chosen a specific Energy Choice or governmental aggregation supplier offer, is a combination of the NYMEX monthly closing price and a Retail Price Adjustment, which is set in an annual auction under Public Utilities Commission of Ohio supervision. For the first time, this year's auction produced a price adjustment of minus 5 cents per mcf. Murphy attributed this result to an abundance of regional shale gas resources and limited pipeline infrastructure to carry gas out of the region to other parts of the country.
These same regional market dynamics also impact prices offered by suppliers participating in the company's Energy Choice and government aggregation programs. "I would advise all our customers to research their natural gas supply options and select one that best meets their family's needs," Murphy says. As always, customers should review their current contract to see whether there are any early termination fees or other provisions that might affect their choice of suppliers.
Customers can evaluate their options at www.dominiongaschoice.com, which provides interactive, one-stop shopping information. Dominion East Ohio supports the site, working with the PUCO, the Office of the Ohio Consumers' Counsel (OCC), natural gas suppliers and community organizations. To help consumers understand the costs and terms associated with certified natural gas suppliers' offers, the site offers such tools as links to the PUCO's "Apples to Apples" comparison chart (www.puco.ohio.gov, or 1-800-299-7271) or the OCC's "Comparing Your Energy Choices" chart (www.pickocc.org) and other objective comparison tools.
Dominion (NYSE: D) is one of the nation's largest producers and transporters of energy, with a portfolio of approximately 26,000 megawatts of generation, 14,400 miles of natural gas transmission, gathering and storage pipeline, and 6,500 miles of electric transmission lines. Dominion operates one of the nation's largest natural gas storage systems with 1 trillion cubic feet of storage capacity and serves more than 6 million utility and retail energy customers. For more information about Dominion, visit the company's website at www.dom.com.
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SOURCE Dominion East Ohio