Nstar Offers Natural Gas at Contract Price (MA)- Good Idea?

[frank1492]

This applies to the "Gas Supply Charge" portion of the bill. The current price per therm is $.9799 and the contract price is $.9999. The relevant time period for the contract is Nov. 1 through Ap. 30. Two questions: (1) Historically, does anyone know what the maximum fluctuation has been during a winter season in the Northeast? (I am in Massachusetts.) Please point me to data if this is kept. (2) A very mild winter would likely drive the price down, but I have heard widely varying reports regarding expected temps in the NE. Anybody have thoughts on this? Of course there are other things that could drive the price up. When oil prices rise, gas seems to keep step for reasons whose validity I have doubted in the past. I have until Nov. 9 to make my decision. Should I do this? Your thoughts are very much appreciated. Thanks. Frank

[Clark]

frank1492 wrote in news: [e-mail]:

The government's version of gas pricing:

And futures contract prices are here:

Looking at the futures, your current price and the offered contract it appears you'll come out slightly ahead since an increase of about $0.4 in Feb then a decrease of about $0.70 (from the Feb price) in April.

About the only way you'd get really burned would be if the market collapsed and that's not likely over the winter. The utility may be hedging and is certainly buying from storage so you won't have major exposure with the contract.

[frank1492]

Thank you for all the info I will need! I think I will go ahead. In your opinion, is it safe to say that the potential advantage/disadvantage of choosing one alternative over the other is probably slight? That's the way I read it. Thanks again for taking the time to help me in my decision. Frank

[Clark]

frank1492 wrote in news: [e-mail]:

You're welcome. Being aware of gas pricing is just part of my business.

I don't see a lot of pricing risk exposure either way since you guys are stuck at the end of the supply chain. I'd check the fine print on the offer to see if there are any min/max volumes that you may run into. It might also be nice to know if your utility is allowed to hedge or pre-purchase gas. If they are hedged then the contract pricing probably reflects that and it's just a way for them to even out monthly gas bills for the consumer.

[Edwin Pawlowski]

My experience is longer terms contracts with Nstar as a carrier and other suppliers. Price has not gone down since we've been contracting under deregulation. The contract does give you some stability and peace of mind. I'd go for it.

If you keep an eye on the degree days as published in the weather section of most newspapers, you can see how the year stands against the previous year and the 10 year average. You won't find much of a variation by end of the season. The past 10 years in Boston varied by only a few hundred.

[frank1492]

Thanks Ed as well.

[Toller]

The fixed price is their best guess as to what the gas will cost them. It is a fair bet to go either way; go with your gut; either choice is okay. I am a little sick that I went variable on electricity 2 years ago; but it is entirely a crap shoot.