Insights > FAQs: How does the rising cost of natural gas impact my utility bill?
FAQs: How does the rising cost of natural gas impact my utility bill?
This summer has brought some of the hottest weather on record, leading to record-level electricity usage by our customers. We remain committed to remaining one of the most affordable utilities in the country. 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 delivery to customers.
1. What does natural gas have to do with my electric bill?
We purchase natural gas to fuel some of our plants that create electricity for delivery to customers. The fuel adjustment on customer bills reflects the cost of fuel purchased to generate electricity at those plants as well as the cost of power purchased from others. It is important to note Entergy does not profit off natural gas price increases that result in increases to the fuel costs collected through the fuel adjustment. Rather, these amounts are passed through to customers at Entergy’s actual cost and regularly reviewed by our regulators.
2. What are utility companies doing to address natural gas prices?
It's true that gas prices increase and decrease based on global economic circumstances beyond any utility’s control. But that doesn't mean we're standing by in the face of higher gas prices. Rather, we've taken many proactive steps to help insulate our customers from exposure to higher gas prices and to mitigate the impacts of higher gas prices. These steps include building highly efficient natural gas plants that generate more energy (and produce less emissions) for every unit of 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 (other than natural sunlight). And 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.
3. If natural gas costs are up, why aren't customer gas bills also much higher?
Increased gas prices are affecting gas bills, too. But residential gas customers typically use less natural gas in the summer months, when electricity usage tends to be very 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.
4. Doesn't Entergy set natural gas prices?
Entergy does not set gas prices and has little control over gas prices, which increase and decrease based on national or global economic circumstances beyond any utility’s control. Entergy doesn't own natural gas production facilities, which means we don't control the price of natural gas or benefit when gas prices are high. 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.
5. Aren't natural gas prices only high in Louisiana? 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.