What Is In A Gas Bill

There are two components that make up a residential natural gas utility bill: the cost the utility must pay to obtain natural gas, otherwise known as the Purchased Gas Adjustment (PGA), which is determined in a 30C case by the Public Service Commission; and the Base Rate, which covers all expenses other than the cost of natural gas the utility incurs in providing service. The Base Rate is determined by the Public Service Commission in 42T and 390P cases. 390P cases were authorized by Senate Bill 390, passed in 2015, and provide for the expedited recovery of costs related to infrastructure replacement and expansion.

  • Base Rate or 42T and 390P Cases
  • Makes up slightly more than half of a typical residential natural gas utility bill (2017-2018).
  • Represents the cost of installing, operating and maintaining the utility’s system to deliver natural gas to its customers.
  • Includes all operation and maintenance costs including initial investment in facilities, equipment, structures and property; working capital to provide utility service; and improvements and repairs on lines, plants, vehicles and other facilities. It also includes all federal, state and local taxes; depreciation expenses; return on investment for the company; staff salaries, benefits and pensions; rents; fees and interest payments on debt.
  • Through these cases, the Commission establishes a fair and reasonable set of rates to meet the utility’s current cost of service and revenue requirements.
  • Purchased Gas Adjustment or 30C Case
  • Makes up less than half of a typical residential natural gas utility bill.
  • PGA proceedings provide for annual rate adjustments based on an estimate of future costs utilities will pay for gas from their suppliers for the period of November 1 through October 30 of the following year and a true-up of actual costs for the previous year.
  • The PGA compensates the utility for what it pays for gas supply, and does not include any profit for the company.
  • The Commission does not regulate the price of natural gas; that price is determined by competitive markets. The Commission does examine the gas purchasing practices of gas utilities, reviews the reasonableness of requested increases and ensures the utility did everything possible to obtain a reliable gas supply at the lowest possible market price.