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Energy Pricing Offers 101: Natural Gas

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Shopping for natural gas from retail energy suppliers can seem overwhelming. Not every supplier provides the same information or explanation as to how their pricing quote was derived, making it difficult for businesses to identify the best offer. 

Have no fear: Direct Energy Business is here to help. We've put together a straightforward guide on what impacts natural gas prices and what to look for when selecting the best offer for your business. 

There are three factors that make up a natural gas pricing quote: price of supply, overall usage, and the delivery period. Here's what goes into each of the three main components. 

Natural Gas Supply Pricing

Natural gas supply pricing consists of five main costs: 

  • the commodity price or price of natural gas itself
  • the basis, which is the cost difference between two liquid trading points within the interstate pipeline system
  • the physical premium, or costs associated with converting the "paper" value of a gas contract purchased by a supplier into a "physical" value
  • the transportation of gas, which involves reserving space inside a pipeline and physically moving it
  • and, additional costs to cover losses during the transport of natural gas. 

All of these factors can directly impact natural gas supply pricing. 

Natural Gas Usage

Natural gas usage pricing is based on your usage history with previous suppliers and/or your recent invoices. Because this information is estimated, increases or decreases in your usage can affect the overall cost. 

Natural Gas Delivery Period

The natural gas delivery period is the time frame for which you are requesting a pricing quote. As natural gas supply and demand shifts throughout the year, the requested delivery period can impact your pricing quote. 

So, how can you identify the best pricing offer for your business? By soliciting at least three supplier bids, directly comparing the prices of the aforementioned components, and requesting different price configurations to examine your options. Your best option will be a financially stable supplier that can meet your billing, service, and price requirements. 

For more information on finding the best natural gas pricing offer for your business, check out our Energy Pricing Offer 101: Natural Gas infographic

Posted: September 18, 2015