Energy 101-Your Gas Bill

This installment of Energy 101 takes a look at your gas bill.

There’s a lot that may be said on the subject, but I simplified it in order to get to the bottom line: how to save money on your business’ utility expenses.

There’s one major similarity between electric and gas consumption that provides you with opportunities to save money if you are a commercial customer in a deregulated state. That similarity is the fact that you can select your supplier.

The picture below is of a typical positive displacement type meter, which is used in most residential and small commercial applications. It measures the volume of gas flowing through it.

Whether your meter is the type shown, with dials, or the same type of meter but with a digital display, or any other type of meter, the gas flowing through it is measured volumetrically, in cubic feet or a metric equivalent.

The subject of flow measurement is quite complex—beyond boring to go too deeply into that here. If you’re interested in an in-depth look, let me know, and I can walk you through it.

For now, let’s move on to the meat and potatoes. What I hope you’ll get from reading on is the payoff—the ah-ha moment. Saving money is not out of reach. It’s not trickery, or dumb luck, or only for those in the old boys’ club. It’s there, potentially, waiting for you to find it, take action, and reap the rewards.

Certainly, you’ve seen your gas meter, and perhaps you’ve even taken time to read the dials to compare your own reading to the one that shows up on your bill. If you do that, my take is that you’re in the minority. Most of us simply rely on the company that delivers our gas to get it right.

Should we simply ignore our gas meter? How about our gas bills? Should we accept them without scrutiny?

I’m not suggesting your gas metering could be faulty. (It’s certainly possible, but that’s rare.) At the same time, you owe it to yourself and your company to understand gas metering, and how it relates to your bill, since it’s the basis for how much you are charged.

Below is a typical residential gas bill. I used a residential version for simplicity. Commercial gas billing has enough similarity with regard to the two main types of charges: the Delivery Charges and Supply Charges.

(Note: I’ve left out of this explanation such items as the Societal Benefits Charge, the Weather Normalization Charge, the Margin Adjustment Charge, and the Green Programs Recovery Charge I’ve seen on some commercial bills. Those types of charges are baked into some rate classes based on approved tariffs under which gas providers operate.)

In the image below, the circled numbers show the gas meter readings. Meters are usually read every month. (If not read every month, usage is estimated, then trued-up on the following actual reading.)

Also shown is the CCF—total usage for the month.

The first “C” stands for the Roman numeral for 100. “CF” stands for cubic feet. So CCF is the abbreviation for “hundred cubic feet.”

The total CCF is 28. The example bill below is not explicit about the units of measurement, but they do mention the matter in their explanatory note on the bill.

Still with me? Now, on to Btus.

Knowing the volume of gas that flowed through your meter is key, but it’s only the starting point of the billing amount. You are billed based on the Btus of gas you consume.

Btu, or British Thermal Unit, is the amount of heat required to raise the temperature of one pound of water by one degree Fahrenheit.

The image below shows the gas used in Therms.

In the gas business, Btus are generally converted to a more convenient measurement unit called Therm. One Therm equals 100,000 Btus; most consumers use quantities equaling millions of Btus.

If left in units of Btus, the billable amount of 30.927 Therms would be shown as 3,092,700 Btus.

It’s not critical to know about conversions, but to understand your bill, you need to know what a Therm is. The amount of gas, in Therms, is calculated as shown above.

First, the volume of 28 CCF is converted to 29.910, but the units are still CCF. Are you wondering why the CCF is multiplied by 1.068?

It’s not explained on the bill, but it’s converted to meet gas industry measurement criteria. It’s a way of keeping things apples and apples, and is accepted by the gas industry as standard practice.

Gas is compressible, so the volume changes with pressure and temperature, therefore the volume of gas that flows through a meter may be measured differently in the winter than in the summer.

After correcting for pressure and temperature, the volume in CCF is converted to Therms. In the example above, the conversion is 1.034, which is the heating value of the gas in Btu/CF.

Heating value, or gas quality, is dependent on the amount of methane and other substances in any volume of gas. Natural gas is 70-90% methane, and it’s heating value is 1.012. So, for the gas heating value to be 1.034, there must be other gases with higher heating values mixed with the methane. One such gas that’s likely in the mix is ethane, with a heating value of 1.783.

I know, you probably couldn’t care less if your gas had 1.679% isobutane, with a heating value of 3354. You just want it to produce a nice blue flame. Then, enough said about that. As long as you walk away with the understanding of Therms, you’re money ahead.

One more tidbit, however. If your business consumes a large volume of gas, you may be billed in DecaTherms, abbreviated as DT. Deca means 10, so a DecaTherm is 10 Therms, or 10 x 100,000 Btus, or 1 million Btus.

Almost every charge on your gas bill will be based on your usage in Therms, but there are some fixed charges as well. In the image below, under the category of Delivery Charges, you can see a monthly service charge of $8.62. On this bill the service charge is a fixed amount. It’s basically the cost of being connected to the gas system. You will pay a service charge of some kind, whether you use any gas or not.

The other charges shown below are variable, based on the usage. They are all part of the delivery charges. Again, these charges pertain to the connection to the gas system.

The image below shows a supply charge of $9.90. That amount charged is based on the usage and the rate charged by the supplier who, in this example, is named XYZ123.

Delivery charges go to the company whose pipes are connected to your meter. Supply charges go to the company whose gas is flowing through the pipes.

You can save money on gas by using less of it. You can also save by selecting a supplier that offers lower rates. This is where you get to make a choice.

The obvious question is—how do you determine who provides the best rates?

You could do your own research and due diligence, but is that the most effective use of your time and resources? There is a better way, which costs nothing and is as fool proof as it gets.

Contact me, and I will initiate a rate analysis through my affiliation with Broker Online Exchange (BOX). Using their sophisticated technology and connection with over 90 suppliers, if there are better options available to your company, the rate analysis will identify them.

Armed with this information, you can make an informed decision. There is no cost and no obligation. It’s simply knowledge, and knowledge is power—power to make the right choice.