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Insights > How the rising cost of natural gas affects your utility bill
How the rising cost of natural gas affects your utility bill
09/08/2022
This summer reached historically high temperatures, causing record-level electricity usage by our customers. Natural gas accounts for about a quarter of global electricity generation. While we have taken steps to limit our use of natural gas, we purchase natural gas to fuel some of our plants that create electricity for customers.
What does natural gas have to do with my electric bill?
Customer bills include the cost of fuel purchased to generate electricity at those plants as well as the cost of power purchased from others. Entergy Texas does not profit from natural gas price increases. Instead, these amounts are passed through to customers and are regularly reviewed by our regulators.
What are utility companies doing to address natural gas prices?
Natural gas prices increase and decrease based on global economic circumstances beyond any utility’s control. We've taken proactive steps to help protect our customers from exposure to higher natural gas prices and to mitigate the impacts of higher natural gas prices. Steps include building more efficient natural gas plants that generate more energy (and produce less emissions) for every unit of natural gas they burn, investing in existing nuclear plants that generate large volumes of energy while using no gas and producing no emissions, and incorporating renewables like solar that produce energy without using fuel. By diversifying our portfolio as we have and continue to do, we can better protect our customers from negative impacts from increases in the cost of any specific type of fuel.
If natural gas costs are up, why aren't customer gas bills also much higher?
Increased natural gas prices are also affecting gas bills. However, residential customers typically use less natural gas in the summer months, when electricity usage tends to be high due to electric-powered air conditioning. If fuel prices are still elevated in the winter months when residential gas consumption for home heating is much higher, then the effects of those higher prices may be felt in the form of higher gas bills, as gas usage for heating increases.
Doesn't Entergy Texas set natural gas prices?
Entergy Texas doesn't set natural gas prices or own natural gas production facilities. Natural gas prices increase and decrease based on national or global economic circumstances beyond any utility’s control. We ensure that we’re buying natural gas in a cost effective manner. Natural gas pricing fluctuates and is impacted by supply and demand in the global gas markets. The Energy Information Administration has attributed the high costs to pandemic-related supply chain constraints, extreme temperatures and severe weather events, and Russia’s ongoing war with Ukraine, which has led to a supply shortage from Russia, the world’s second largest producer of natural gas.
Aren't natural gas prices only high in Texas? I don't think customers in other markets are seeing higher bills.
Natural gas accounts for about a quarter of global electricity generation. After COVID-19 restrictions began easing in 2021, global demand for natural gas gradually picked up, and then supply was constrained because Russia’s invasion of Ukraine in February reduced supplies to Europe. Natural gas prices have more than doubled when comparing June 2021 with June 2022.
