Clark Howard: Natural Gas Basics


Natural Gas Basics

No matter which company you use, there will be fees that you will pay that come under the general heading of ‘base charges.’ The base charges should be identical or nearly so from each company. Some bundle them all together or split them out into a bunch of confusing things.

Your base charge will vary from that of your neighbors or friends as it is set by your individual demand for gas over a year’s period. The more gas you use, the more you pay for the base charge.

The companies DO NOT compete on price on base charge. Remember, it should be about the same with all companies.

The big price choice you make is for the gas itself. Gas is measured by something known as therms. Companies will quote you so many ‘cents per therm’ or a ‘commodity price’ just like a gas station quotes so many cents per gallon when you fill up your car.

There are three pricing formulas in the market right now. You first need to decide which you like best:

  1. The price per therm floats with a different price each month.
  2. The price per therm is fixed with the same price each month for a year or more. In this example, the company is taking the risk that the price of gas rises over time, but they are stuck providing it to you at the guaranteed price. Also, you get stuck paying too much if the price drops below the fixed level.
  3. You pay a set total bill per month for a year or more regardless of how much gas you use. This is different than budget billing where your bill is adjusted based on your actual use each year. In this case, your price is guaranteed even if you use a lot more gas than expected. Also, you end up paying more than necessary if you use a lot less than expected.

Once you decide which of the three methods of pricing you want to shoot for, you are ready to shop.

Let’s say you decide you want a fixed cost per therm for a year. You would call the marketers and ask what their guaranteed rate is. As long as there is no ‘gotcha’ like in the next paragraph, the company that offers the lowest fixed price per therm will be your cheapest company.

As you get quotes, ask if there is a separate ‘pipeline’ charge. If so, thank them very much and hang up. Residential customers will usually pay a much higher total bill per month if the marketer charges a pipeline fee. Small business owners should know that certain types of businesses such as restaurants may be better off paying a pipeline fee.

Finally, be careful signing a contract. Natural gas deregulation is still in a shake-up period. It’s clear from calls to the PSC and the ‘scorecard’ that the Georgia Public Service Commissioner is compiling which companies are providing decent customer service and which are not behaving.

Experiencing billing problems?

Many Atlantans have never received a bill from their new natural gas provider. Still, others have received inconsistent or late billing in huge amounts.


First, if you’ve never received a bill don’t think that you don’t have to pay. You will eventually receive a bill and by the time you do receive it the amount may be staggeringly high. Let’s say you receive a bill that covers a four-month period. You aren’t expected to pay the entire bill by the due date. You will have the same four months it took to get to you to pay it off. Better still, contact the company to work out a payment plan.

Still waiting for a bill?

Take the time to monitor your own meter to ensure that you won’t be excessively charged. Try to gather your natural gas bills from the same time period during and compare it to the new bill. The rates shouldn’t match exactly, but you’ll gain a better idea of your therm usage patterns for the same time period.  Please refer above to payment plans once your bill does arrive.

Lastly, contact the PSC at (404) 656-4501 — or 1-800-282-5813 if you’re outside of Metro Atlanta — for assistance with chronic service and billing problems. The PSC does not and will not regulate the price of gas or other marketer charges.

Experiencing sticker shock over your bill?

The myth of natural gas deregulation was that our bills would be lower. The new marketers’ major responsibility is buying gas and reselling it to make a profit. By avoiding companies that require you to sign a contract, you are free to switch companies should you find a lower rate or better customer service.