Affordable Natural Gas Service Supported by Fixed Customer Charges

Energy Insights

Natural gas utilities tend to use fixed charges in the customer bill to recover fixed costs to deliver gas, and variable charges to recover variable costs. Those costs may include the cost of maintaining safe and reliable service. Utility bills generally include charges for energy distribution, energy supply, fixed monthly customer charges, and taxes. A significant portion of utility costs can be considered fixed over the period a given rate is in effect.

In recent years, on average, gas bills have shifted towards a larger fixed component charge that benefits both customers and utilities. While some worry this could lead to higher bills, the data show the opposite: as the fixed charge component of gas bills has increased, gas bills have remained the same in inflation-adjusted terms, which contrasts with rising electric bills.

Key Findings

Fixed customer charges provide predictable cost recovery for essential gas infrastructure without inflating customer bills and thereby encouraging more energy efficiency and decarbonization measures.
Since 2014, 100-therms adjusted residential natural gas bills have decreased from $143 to $136 per month, or -0.4% per year. The inflation-adjusted fixed customer charge for residential customers has, on average, increased from $18.66 to $18.85 since 2014, or 0.1% per year. The relative stability of fixed customer charges over this period is principally due to inflation and maintaining the natural gas system.
Average electric bills normalized to a 3,410-kWh (100 therms equivalent) rate of consumption and adjusted for inflation have grown from $471 per month to $562, an increase of 1.6% per year.
In East North Central, where the average fixed charges surveyed increased the most from an adjusted $19 to $24 or 1.8% per year, final energy bills for consumers have decreased from an adjusted $121 to $99 at an annual rate of -1.8%.

AGA Contact: Brendan O’Brien, 202-824-7220.

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