What EXACTLY am I paying for each month?
Costs are on everyone’s mind these days. Affordability talk is blasted on national media, commercials, and discussed over dinner tables – including utility bills. But what are you actually paying for when you pay your natural gas bill?
When you look at your natural gas bill, you might think most of the cost comes from the natural gas being used. However, recent analysis estimates that the natural gas molecules you use only make up about one-quarter of the average U.S. residential natural gas bill. That’s less than 27 cents of every dollar. The remaining costs come from delivering gas to homes, maintaining the system, taxes, and other approved program costs and charges.
In fact, the largest share of the average bill is tied to operating and maintaining the local gas distribution system. These charges cover the everyday work needed to deliver natural gas safely and reliably to your home.
How much of every dollar goes toward delivering natural gas safely and reliably?
- Answer: About 49 cents of every dollar goes toward the pipes, meters, safety programs, maintenance, customer service, and other infrastructure needed to deliver natural gas safely and reliably every day.
How much of these costs is fixed?
- Answer: About 16 cents per dollar of these costs are fixed, meaning they don’t change month-to-month.
How much of these costs is variable?
- Answer: The rest—about 33 cents per dollar—tends to be variable charges based on how much natural gas you use.
These costs are essential to making sure that your natural gas service operates every day of the year.
Your bill also includes taxes and charges for specific programs. Taxes account for about 9 cents of the average residential bill, while policy riders and surcharges—which help fund programs like energy efficiency initiatives, environmental remediation, and storm recovery efforts required by regulators and policymakers—make up about 10 cents per dollar of the average bill. Together, these charges can be comparable to the cost of the natural gas itself.
Finally, keeping the system running also takes capital investment. Utilities borrow money from lenders and raise funds from investors to build and maintain the system. Lenders earn interest on those loans, while investors have the opportunity to earn a return on the money they put into the company. Those funds help utilities pay for projects up front, and costs are recovered over time through customer bills. A small portion of your bill—less than 5 cents of every dollar, on average—covers the return to lenders and investors who provide funding for the utility.
The bottom line: most of what customers pay each month isn’t for the natural gas itself.
The next time you open your natural gas bill, look beyond the total to see what the individual charges cover. Some pay for the gas you use, while others support the system that delivers it. The names and amounts will vary by utility, but understanding those pieces can help you see how your bill supports safe, reliable natural gas service.