Natural Gas Bill Calculator

A gas bill is an energy bill read off a volume meter. The meter records cubic feet, but the utility charges for heat content: one therm equals 100,000 British thermal units, and the conversion from volume to therms uses a BTU factor, typically between 1.00 and 1.10 therms per hundred cubic feet, reflecting the heating value of the gas actually flowing in that distribution system. The bill then decomposes into a fixed customer charge of roughly 8 to 20 dollars covering metering and billing, a commodity charge for the gas molecules themselves, a delivery charge per therm covering the local pipe network and leak surveys, and state or local taxes usually in the 3 to 8 percent range. Usage swings far more than price does. In a cold-climate home, space heating accounts for 45 to 65 percent of annual gas consumption, so a household burning 80 to 150 therms in January may fall to 15 to 30 therms in July when only the water heater, range and dryer remain in service. Energy Information Administration data put average US residential consumption near 55 to 60 therms per month when averaged across the year. The main caveat for anyone estimating a bill is that only the commodity component tracks market prices. Delivery rates are set in state utility commission rate cases and barely move month to month, so a sharp fall in wholesale gas prices reduces a household bill by considerably less than the headline percentage.

The British thermal unit, defined as the heat required to raise one pound of water by one degree Fahrenheit, was in general engineering use by the mid-nineteenth century, and the therm was adopted as a convenient hundred-thousand-BTU multiple for the gas trade. Utilities originally sold manufactured coal gas by volume, but heating value varied so widely between gasworks that volume alone made an unfair pricing basis. Britain formalized therm-based billing under the Gas Regulation Act of 1920, and American distributors moved to therms and BTU factors as pipeline natural gas displaced manufactured gas following the long-distance transmission lines built in the 1930s and 1940s. The split between commodity and delivery charges visible on a modern bill is a product of federal restructuring rather than accounting preference. The Natural Gas Policy Act of 1978 began decontrolling wellhead prices, and the Federal Energy Regulatory Commission then unbundled the industry through Order 436 in 1985 and Order 636 in 1992, which required interstate pipelines to separate gas sales from transportation service and sell each on its own terms. Local distribution companies followed the same pattern, and by the late 1990s states including Georgia and Ohio had opened retail choice programs allowing households to buy gas from a competitive marketer while the incumbent utility continued to own the pipes and deliver it.