Just in time for the colder months ahead, Chattanooga Gas Co. rates will drop next Friday because of the continuing decline in the price of natural gas at the wellhead.
The typical Chattanooga household that heats with natural gas will save $2.35 in October because of a nearly 18 percent cut in the purchased fuel adjustment by the gas utility, figures show. Steve Lindsey, vice president and general manager of Chattanooga Gas, said the utility is passing along the cheaper commodity price to the more than 60,000 residential and commercial customers it serves in Hamilton and Bradley counties.
"We purchase natural gas from the most reliable sources at the best price for our customers," Lindsey said.
The price of natural gas bought by the Chattanooga utility has dropped by more than 40 percent from the peak reached two years ago after natural gas rates spiked in 2007 and 2008.
Pat Murphy, deputy chief of utilities for the Tennessee Regulatory Authority, said similar reductions are being made by Nashville Gas, Piedmont Gas and other regulated gas distributors in Tennessee.
"The commodity price of gas has dropped nearly in half since 2008 and remained fairly stable this year," she said.
The U.S. Energy Information Administration projects gas prices will decline slightly in September and October before rebounding at the onset of colder weather. In its most recent short-term outlook, the government projects gas prices will remain more stable next year.
More than 60 percent of the typical gas bill comes from the commodity price of gas, and the rest goes to pay for the local utility to store and distribute gas to customers.
The drop in gas prices provides a reprieve for Chattanooga consumers facing recent or planned increases in electricity, sewer and water rates and higher property tax and stormwater fees.
"It's difficult in this economy to absorb these type of increases," Chattanooga Manufacturers Association President Tim Spires said.
The drop in gas prices next month reflects a 10.4 percent cut in the ongoing commodity price of gas, plus another 7.4 percent reduction based upon regulators' annual "true-up" of what fuel actually cost the utility compared with what it charged consumers of the past year, Murphy said.
"We adjust rates every year to balance what was charged with what the commodity actually cost the utility," she said.
Contact Dave Flessner at dflessner@timesfreepress.com or 423-757-6340.