According to the early release of the Energy Information Administration s (EIA) Annual Energy Outlook (AEO), natural gas demand is slated to grow 16.2 percent, increasing from 20.4 percent Tcf in 2007 to 23.7 Tcf by the year 2030. EIA projects the greatest increase in natural gas demand in the next 25 years will be for electricity generation. AGA believes that if climate change legislation is enacted, natural gas will play a prominent role in reducing carbon emissions and gas demand will be substantially higher.
Roughly half of the electricity generated in the United States is fueled with coal, according to the U.S. Energy Information Administration (EIA). Natural gas fuels approximately 20 percent of electric power generation, with nuclear, oil and hydropower making up most of the remainder.
Because of its many environmental and economic benefits, natural gas has become the fuel of choice for new electricity generation, especially since demand for electricity is increasing and some nuclear and aging fossil fuel plants face retirement.
The industrial sector continues to rely heavily on natural gas as its energy source of choice. Industrial natural gas use represents over 30 percent of all gas consumed in the United States. The use of natural gas in this sector is spurred by the entry of new, high-efficiency, gas-fired industrial technologies that provide productivity improvements, cost savings, and emission reductions at a customer s site.
Almost all (84 percent) of the natural gas consumed in the United States is produced in the United States. Thirteen percent of U.S. consumption comes from Canada. Three percent of the natural gas consumed in the United States is imported as liquefied natural gas (LNG).
Because many AGA members have a stake in the outcome of NAESB deliberations, AGA monitors NAESB activities to mitigate adverse effects on the business and operations of local distribution companies and their approaches in their efforts in front of regulatory bodies.
Natural gas distribution companies typically include in their base rates the cost of gas the utilities purchase for customers. Utilities do not mark-up or earn a profit on the sale of the natural gas commodity they acquire on behalf of their customers. Instead, utilities are reimbursed the costs of natural gas supplies through base rates, which are set in periodic rate cases before state regulatory commissions.
Natural gas utilities send bills to customers each month that include the actual cost of the natural gas delivered to those customers. By law, utilities are not permitted to mark up or profit from these costs. The consumer bill consists of the exact amount the utility was charged for the natural gas, as well as charges associated with delivering natural gas and serving customers.
Natural gas travels through a 2.3 million mile delivery system for use in homes and businesses. The safety record of this system and the natural gas utilities is outstanding and it keeps getting better.
AGA's Natural Gas Market Indicators is published on or about the 15th and 30th of each month. The two-page report summarizes recent developments in natural gas pricing, heating and cooling degree days statistics, underground storage, domestic gas production, rig counts, pipeline imports and exports, and international LNG issues.
The Natural Gas Act (NGA) of 1938 and subsequent amendments define the Federal Energy Regulatory Commission's (FERC) role regulating the natural gas industry. Under the NGA, the Commission regulates both the construction and operation of natural gas pipelines, on-shore LNG import terminals, and related facilities. In this role, FERC oversees the rates, terms and conditions of sales for resale and transportation of natural gas in interstate commerce.
Local natural gas utilities have an important stake in how the Federal Energy Regulatory Commission (FERC) regulates the rates, terms and conditions of interstate pipeline transportation and storage services.
Interstate natural gas pipelines consume volumes of natural gas in their operations to fuel compressor stations and to make up for lost and unaccounted-for gas. Pipelines frequently require their shippers to contribute a percentage of the volumes of natural gas tendered for transportation for these operational purposes. Pipelines also include in their tariffs the mechanism for retaining a percentage for fuel and the percentage retention rates. Currently effective fuel retention rates range from fractions of a percent to as high as 13 percent.
Most energy utilities that deliver natural gas have a history of paying regular dividends to investors, many without interruption for decades or even longer. Lower tax rates on dividends significantly benefit natural gas utility shareholders and make energy utilities a more attractive investment.
Natural gas energy efficiency programs are widespread throughout the country and successfully deliver energy and financial savings to customers. Important to the success of these programs is ensuring that utility incentives are aligned with helping customers reduce their usage i.e., where utilities are able to recover direct program costs and lost revenues, and earn a profit on energy efficiency services, they are stronger partners with customers in achieving conservation.
The world in which utility companies deliver energy is changing
Amidst pending carbon legislation, emerging "smart" technology, and increasingly integrated, consumer-driven energy markets, electric and natural gas utilities are exploring both new requirements and new opportunities. In this changing world, utilities must take a more holistic look at our energy system in order to continue serving the needs of American homes and businesses in the most cost-effective and environmentally sustainable way.
America's natural gas utilities have demonstrated their commitment to promoting cost-effective and practical approaches to increasing energy efficiency. In the United States, utilities invested nearly $838 million in efficiency programs in 2010. They also budgeted nearly $1.2 billion for the 2011 program year (this represents a growth of 42 percent compared to 2010 spending levels). Learn more about natural gas rate-payer funded utility programs.