Natural gas prices for the 2022-23 heating season are expected to be higher than what Montana-Dakota Utilities customers paid last season. For a variety of reasons, prices could be about $30 more per month compared to the 2021-22 heating season, which runs November through March. The cost of natural gas is a straight passthrough to Montana-Dakota’s customers, and MDU does not earn a profit on those costs.

Montana-Dakota understands prices have increased for many day-to-day necessities because of inflation; securing a reliable source of natural gas for our customers is facing the same higher price challenges. The company goes through a robust process to secure an adequate supply, using different sources and methods to mitigate price increases as much as possible.

Natural gas prices are determined by numerous market factors, such as supply and demand, weather, imports and exports, underground storage levels and natural gas production.

Montana-Dakota customers typically use 70 dekatherms of natural gas over the heating season. The expected increase in natural gas costs is about $150 over the five months for an average residential customer, or $30 per month. The price outlook is based on a 30-year weather average.

If the winter season is 10% colder than average, the winter heating season cost would be about $200, or $40 per month; conversely, if it’s 10% warmer than average, residential customers would pay, on average, about $80 more for the heating season, or $16 per month.

Montana-Dakota Utilities Co.

Gas Commodity: $6.308*
Authorized Distribution Charge: $1.015*
*Average across MDU 4-state territory.

natural gas price outlook
natural gas price outlook

Securing supply for Montana-Dakota customers

Montana-Dakota goes through a robust process to secure an adequate supply for the winter heating season, using different sources and methods to mitigate big swings in prices. The company uses a pair of underground storage facilities where it places about a third of its winter needs. That natural gas is bought over the summer, typically at lower prices; however, prices were elevated for most of the summer because of increased demand by natural gas-fired electric generation.

While natural gas prices are higher this winter heating season, natural gas is still 30-50% lower cost when compared to heating your home with electric or propane.

Why are natural gas prices higher this heating season?

As we head into the winter heating season, there are several reasons natural gas prices are high, and expected to remain high through March:

Electric generation

A hot summer and fall have played a role in driving up demand for natural gas. July demand for natural gas was the highest since 2012 according to S&P Global Platts Analytics, and the month came in as the third-hottest on record in the U.S. The amount of electricity generated by natural gas power plants is a big factor in growing demand.

Electric power generated by natural gas-fired power plants reached a new peak of 6.37 million megawatt hours on July 21, mainly because of above average temperatures, reduced coal-fired electric generation and recent natural gas-fired generation additions.

Russia’s invasion of Ukraine

How does an action on the other side of the globe affect natural gas prices in the U.S.? A number of European countries have stopped importing natural gas from Russia because of Russia’s conflict with Ukraine, which has driven increased imports from other sources, including liquified natural gas from the U.S.

The United States became the world’s largest LNG exporter during the first half of 2022. The increase in LNG exports is because of increased export capacity, increased international natural gas and LNG prices, and increased global demand, particularly in Europe.

Underground storage

Nationally, natural gas in storage is 9% lower than the five-year average. The other impact is that the price of natural gas put into storage over the summer has been higher than usual.

The bottom line

The overall bottom line is that natural gas prices are high because supply is not keeping up with demand.

What customers can do to lower costs

Natural gas consumption is the largest segment of a monthly bill, accounting for about 75-80% of the total natural gas service charge.

Montana-Dakota offers balanced billing as a way for customers to levelized their payments over the course of a year, which mitigates wide swings month-to-month. More information is available here.

Customers can control costs by installing a programmable thermostat, having their furnace checked prior to the heating season, changing furnace filters regularly, and caulking or weather stripping leaky windows and doors. More conservation tips and information is available here.

Montana-Dakota can also direct customers to agencies that provide financial assistance, such as the Low Income Home Energy Assistance Program, or LIHEAP. More bill assistance information can be found here.