Frequently Asked Questions: Natural Gas Prices

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If you wish to submit a formal complaint and need assistance, you should contact the North Carolina Utilities Commission - Public Staff Consumer Services at 919-733-9277 or at Also, you may want to visit the Public Staff's Consumer Services website.

In very general terms, your natural gas bill pays for three things: the cost of the natural gas itself, the cost of moving the gas from gas-producing areas such as the Gulf Coast, Marcellus Shale and Utica Shale to North Carolina, and the cost of delivering that gas to you.

The bill that you receive is probably from a natural gas local distribution company (LDC). The LDCs in North Carolina are Piedmont Natural Gas, PSNC Energy, Frontier Energy and Toccoa Natural Gas. The rates charged by LDCs are regulated by the North Carolina Utilities Commission (NCUC). Alternatively, your bill may come from one of eight municipal systems around the State that distribute natural gas. The municipal systems are operated by Shelby, Kings Mountain, Bessemer City, Lexington, Monroe, Wilson, Greenville and Rocky Mount. The NCUC does not regulate the rates charged by the municipal systems.

It is important to understand that, while your bill may be from an LDC or municipal system, it includes the cost of gas itself as well as the cost of interstate transportation.

The NCUC has no jurisdiction over the cost of the gas itself. Here in North Carolina, most of our gas comes from along the Gulf of Mexico, Marcellus Shale and Utica Shale where this State has no jurisdiction.

Years ago, the price of natural gas at the wellhead was regulated by the federal government. However, federal regulators, to please consumers, tended to keep the price of gas low. Low gas prices encouraged people and businesses to use more gas but discouraged gas producing companies from drilling for it. The result of decades of federal wellhead price regulation was a severe shortage of natural gas back in the 1970s. In the very cold winter of 1977 - 1978, the shortage grew into a crisis. Congress passed a series of laws to reduce gas demand and to stop the federal government from setting wellhead prices. Wellhead prices are now set by the market.

No. An LDC does not earn a profit on the buying and reselling of the natural gas itself. An LDC is allowed to earn what the NCUC determines to be a fair return on the money that the company has invested in the system that delivers the gas to customers. By law, the LDC is allowed to pass through to customers all prudently incurred costs, including the cost of gas. The cost of the natural gas is passed through to customers at the same price that the LDC paid for it.

North Carolina law requires the Commission to set rates that are fair to two groups: the ratepayers and the investors in the LDC. The Commission sets rates that give the LDC an opportunity to earn what the Commission determines to be a fair return on investment and to recover the costs of providing utility services if those costs are prudently incurred. The prudency of the LDC’s costs is considered in general rate cases in which base rates are set. Furthermore, every year, the Commission looks at each LDC's gas purchasing practices to see if the LDC has been prudent in buying the gas itself. If costs are found to be prudently incurred, there is no legal basis for the Commission to deny the LDC an opportunity to recover them.

Consumers can take steps to reduce gas consumption. Check your gas company’s web site for tips on how to save energy. Here are links to several:

Piedmont - Save Money and Energy

PSNC Energy - Save Money and Energy

The U.S. Department of Energy has also identified various actions that homeowners can take to conserve energy. This information is published in the Department's brochures and on its websites at:

U.S. Dept. of Energy - Energy Saver

Because energy markets are becoming increasingly interdependent, you can act to help reduce the price of gas by conserving electricity. Again, rising demand for natural gas for use in electric generation, among other things, has contributed to high natural gas prices. Natural gas generation is particularly useful in meeting peak demands for electricity. Running clothes washers and driers and leaving unnecessary lights and appliances on during peak electric hours will probably result in electric generators burning more natural gas. If you reduce your consumption of electricity during peak use hours, you reduce the demand for natural gas. While reducing your peak demand for electricity will not have an immediate impact on your bill, it will help to reduce the price of gas for everyone.

Consumers can also take advantage of the equal payment plans offered by most local gas utilities to even out their monthly gas bills. These plans allow consumers to reduce their winter gas bills by paying more during other times of the year when gas consumption is typically much lower. Information on the various Equal Payment Plans (EPP) offered by the natural gas companies in North Carolina may be obtained by calling your local gas company or by viewing information available at gas company websites. Below are links which contain information on EPPs at Piedmont Natural Gas and PSNC Energy (PSNC Energy calls its EPP “Budget Billing”):

Piedmont - Equal Payment Plan FAQ

PSNC Energy - Budget Billing

One major source of assistance is the Low Income Home Energy Assistance Program (LIHEAP). LIHEAP is a block grant program administered by the Department of Health and Human Services (HHS). Congress established the formula for distributing funds to the states based on each state's weather and low-income population. All fifty states and the District of Columbia receive LIHEAP grants each year.

To be eligible for a LIHEAP grant, a household's income must not exceed the greater of 150% of the poverty level or 60% of the state median income. The highest level of LIHEAP assistance goes to those households with the lowest incomes and highest energy costs or needs in relation to income, taking into account family size. States and other grantees must conduct outreach activities designed to ensure that eligible households, especially households with elderly or disabled individuals and households with high home energy burdens, are made aware that this assistance is available. States and other grantees also must coordinate their LIHEAP programs with related programs.

For more information on this program, you may contact your gas company or local Department of Social Services.

More information can be found on LIHEAP on the NC Health and Human Services webpage.


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