May 2016 natural gas prices
The gas utility tariffs for May 2016 are in and we compare them to average retail heating oil prices. The rates below are expressed in heating oil gallon equivalents, and so present gas rates on a British thermal unit (Btu) to Btu equivalent basis with heating oil. These are the system expansion tariffs, which apply to all conversions from heating oil to utility gas. The lower number applies if the home is within 150 feet of the gas main ("on main"), and the higher number applies if the home is more than 100 feet from the gas main ("off main").
The May rates for CNG and SCG are basically unchanged from the previous month. Both CNG and SCG belong to the same parent company, Spanish-owned Iberdrola, though they file for rates separately with the state. Rates for Eversource are about 8 percent lower than last month. Regarding heating oil rates, the most recent figures as of this writing, from April 25, show a statewide average of $2.09 for heating oil, about 3 percent higher from a month ago (click here for most recent heating oil prices). There is wide variation from county to county for heating oil prices. For example, the county average for Fairfield was $2.35/gall. while the county average for New London was $1.95/gall.
How do you use this information with customers? We suggest comparing your heating oil price with the higher, off-main utility price. If your price is lower, that illustrates that the customer will lose money by converting, at current rates. If your price is higher, then you can show the following calculation. Let's say you're in the CNG utility area in Hartford, and your average price is, for illustration purposes only, the county-wide average of $2.12/gall. The utility off-main conversion rate for CNG is $1.82, resulting in a price differential of 30 cents from the Hartford average oil price. Now look at the payback period. It will cost, let's say, $7500 to convert to gas. Assuming the customer burns 700 gall per year, then converting saves him 30 cents per gallon or $210 per year, using today's rates. At a $210/year savings, it'll take 36 years to recoup his $7,500 cost of conversion. Considering that a consumer survey we conducted shows consumers think their payback for conversion is less than five years, this long of a payback is a nonstarter, especially since you can show your customer that there are a lot more surefire ways they can save money through energy conservation compared to conversion which is expensive and a hassle.