CNNGA values its customers and the communities it serves. The Gas Authority works to be prudent in the decisions it makes and fully understands that this community chooses the Gas Authority as the energy source to fuel the needs of their homes and businesses. This unprecedented increase in wholesale gas cost impacted the entire country. All Natural Gas utilities across the nation are facing these same problems and are having to make key decisions on how to move forward.
Gas costs did stabilize as February began.
In addition, customer consumption has declined as February has been milder than expected. With supplies up and overall demand down, the pricing for the customer is expected to return to pre-storm price levels for the gas delivered during the month.
Some customers asked why we did not spread these costs over the months to come. CNNGA encourages its customers to contact the Gas Authority and set up payment arrangements as the way to spread these costs out. All amounts due on the January billing statement are eligible to be spread over the next six months in addition to any new usage charges in the upcoming months. Please call the Gas Authority at 864-833-1862 to make arrangements.
CNNGA would like to assure its customers that it did take the necessary steps to schedule the volumes of gas expected to be needed. These volumes proved to be accurate and no unplanned outages or system issues occurred. Below, CNNGA has provided more context to the events leading to the increased gas cost during late January.
CNNGA CUSTOMER
GROUPS
Firm: Consists of Residential, Commercial, and Industrial customers who require guaranteed delivery of natural gas to be available at any time every day of the year.
Interruptible: Typically - Industrial, Commercial, or Institutional Customers who have the capability to go to alternative fuel or stop gas consumption during times of peak demand.
Where does CNNGA get its gas?
Producers: Natural Gas used in the Carolinas is typically produced in the Gulf of America or Pennsylvania. The gas produced in these areas is traded as a commodity and shipped through a network of pipelines to its destination.
Pipelines: CNNGA brings gas into its system through 2 delivery points from 2 separate pipeline operators. One delivery point is with Williams Transco near Fountain Inn and the other is with Carolina Gas Pipeline between Clinton and Newberry.
Most of the gas brought into CNNGA’s system is delivered through the Williams delivery Point and CNNGA contracts with Williams to ensure adequate Firm capacity is available for anticipated demands.
CNNGA also has contracts with Carolina Gas Pipeline for an additional amount of Firm capacity which furthers CNNGA’s ability to meet its Firm delivery obligations.
In addition to the Firm Capacity with Carolina Gas Transmission, CNNGA has arrangements in place with Southern Natural Pipeline for additional capacity which can be delivered to CNNGA via the Carolina Gas Transmission delivery point.
How does CNNGA procure gas?
CNNGA utilizes a mixed plan to procure the gas it needs to meet its customers’ demand. Below are the key components of how gas procurement occurs:
Hedge: CNNGA buys a portion of its base amount of gas in a hedged agreement that allows the Gas Authority to lock in pricing for a specified amount of gas. These arrangements typically run from 12-48 months and have served CNNGA well for many years. In recent years the hedged price has increased significantly, and the Gas Authority has adjusted its hedged volumes based on market conditions and commodity price expectations.
Monthly Index (Swing Service) Take or Pay: CNNGA also secures the remainder of its base load needs via monthly guaranteed pricing which is established at the beginning of each month.
CNNGA’s arrangement for this gas allows the Gas Authority to take the gas into its system each day as scheduled and as needed. In this buying mechanism, if the gas scheduled is not needed and not taken into CNNGA’s system, then the Gas Authority is not required to pay for gas that was not received. The ability to take the gas or not in this purchasing mechanism allows the Gas Authority to take advantage of better prices when other supplies can be purchased below the established monthly index pricing.
Gas Daily purchases (GDA) are the next mechanism the Gas Authority uses to purchase and schedule gas to meet its customers’ expected needs. Each day CNNGA works with gas schedulers to make decisions on upcoming gas needs. By 900:AM each morning CNNGA must place its request for gas to meet the expected demand in the next day’s weather cycle. When the prices for daily gas drop below the monthly index price CNNGA will review the weather forecast and schedule a fixed amount of GDA gas that must be taken into the system which will offset any available gas within the Monthly Index option. If the gas needs are high due to pending weather CNNGA typically uses a mix of Hedge, Monthly Index, and GDA to meet an expected demand.
Storage of natural Gas is another tool CNNGA uses to help buffer against dramatic increases in commodity pricing during periods of high demand and market fluctuation. CNNGA maintains enough storage to meet its peak demands for several days, if needed, but the amount the Gas Authority can pull into its system is limited by supplier operations and available capacities. So, if it is used, the capacity CNNGA has will be required to deliver it to the Gas Authority’s city gates. Storage works well when prices climb higher than Monthly index and Gas Daily prices.
During severe weather events and other periods of high demand CNNGA’s system may max out the available capacities with the options listed above. When this happens, CNNGA has one final option to buy gas on the Spot Market which is rarely utilized by CNNGA. The reason it is rarely used is due to its susceptibility to market fluctuations as many customers are competing for the gas available on the Spot Market, which can drastically increase the price of gas.
Curtailment of CNNGA’s Industrial Interruptible customer group is also an option CNNGA has at its disposal to shed some gas load during significant events and minimize the amount of gas that needs to be purchased to maintain its Firm gas commitments.
January Set Up
CNNGA started determining January gas needs in late December, several weeks before the first of the month. The Gas Authority evaluated the expected cost of gas and then took into consideration the forecasted weather for the month. Options for releasing gas capacity were evaluated. Based on the mild forecast and traditional demand the capacity needed for the month was determined and scheduled. Once monthly index prices settled CNNGA calculated preliminary pricing with the expectation that at the end of the month it would make a purchased gas adjustment, if needed, when supplier invoices were finalized. This allows CNNGA to consider additional charges which need to be recovered or credits which can be applied to reduce overall pricing.
What Happened this January
In late December and early January, the weather forecast for the month indicated that January would likely be warmer than a typical January. The Gas Authority then looked at the last several years of data and determined the average amount of gas delivered to CNNGA over those years. With the expected demand being similar to the average and the forecast being milder CNNGA determined that the needs for this past January would be similar or less than previous years. As January began the weather forecast and demand were in line with the initial predictions.
Weather patterns remained consistent until mid-January where forecasts began to change and predictions started to indicate the pending Arctic weather and potential for severe cold and Ice.
Market fluctuations began in mid-January and gas daily prices began to climb in anticipation of the predicted severe weather. As the arctic front moved across the nation forecasts continued to decline as the ice storms impacted over 40 states. Natural Gas supplies in Texas and other gulf states were impacted drastically as many of the production facilities froze off or lost power which stopped 50-60% of gas production during the peak of the severe weather. As these production supplies went offline the cost of gas on the Gas Daily and Spot Markets increased dramatically as power generation facilities, industries, and gas utilities all competed for the gas to meet their own needs. Any entity scheduling gas needs in the Daily or Spot Market had no control over the pricing in these markets during this timeframe.
As CNNGA took steps to secure the gas needed to meet its demand, the Gas Authority did take steps to lessen its gas needs as severe weather set in. CNNGA, as part of its planning efforts, curtailed its interruptible customers Friday January 23rd until Tuesday January 27th. During this timeframe some of CNNGA’s interruptible customers could not curtail and CNNGA did have to schedule additional gas through the Gas Daily Market to meet these customers’ needs. The additional amounts scheduled in the Gas Daily market for these customers were minimal in comparison to the volumes of gas CNNGA scheduled for its Firm obligations with the Daily Markets and these costs were allocated to the interruptible customers who could not completely shut their production off.
CNNGA did make plans and schedule to utilize its storage capacity as GDA and Spot prices increased. With that said, the Gas Authority’s gas is stored in Caverns in Mississippi, and those caverns were shut down for many days by the ice storm. As the storage facilities came online CNNGA moved immediately to use its storage and offset the higher Gas Daily pricing impacts.
Why are Customer Gas Bills So High?
Customers using natural gas will experience a temporary increase in the cost of gas for all gas delivered in January 2026. Monthly index pricing climbed slightly as the Southeast prepared for the expected cool but mild January forecast. As the forecast changed in mid-January and the demand picked up, CNNGA took steps to control the volumes of gas needed to keep its system operational. These steps included curtailment initiatives for some customers and prudent scheduling of gas to meet the expected customer demand. CNNGA started each day with its base load scheduled automatically and determined additional needs based on the expected weather impacts historical usage data.
By 900:AM each morning the Gas Authority submitted its request for the volumes of gas needed from the Gas Daily market for the next day. Requests are processed and scheduled at 9:00 AM and pricing for the scheduled volumes is not typically finalized and posted until the late afternoon of the business day on which it was requested. Entities making the request have a limited ability at that point to make any changes. During the cold weather in January both ice storms happened over weekends. This has a significant impact on the gas scheduling for these timeframes because over a weekend a gas scheduler must typically schedule for 3 days.
During January the first storm happened over the holiday weekend which required the scheduling of gas for 4 days consecutively. With this extended duration schedulers are required to schedule the same amount of gas each day.
Therefore, if an entity needs large volumes of gas on Monday, they have to schedule the same amount of gas Saturday and Sunday even if the demand needed on those days is minimal. Both severe weather events in January had weekends with split gas demands where mild days were mixed in with severe days and this required the Gas Authority to schedule gas for all days as if each had similar demand needs.
Pricing on the Gas Daily Market quickly became volatile as supplies and storage were shut in. In early January Gas was typically costing the Gas Authority below $6.00 per Dekatherm. The cost of gas to the Gas Authority increased to more than $30.00 per Dekatherm for sustained periods around January 23rd. In addition, for several days prices for gas reached as much as $60.00 per Dekatherm and for a short period $97.00 per Dekatherm for delivered gas. The Authority had no control over these prices and resulted in an estimated additional cost to the Gas Authority of $1.78 million for the gas delivered during this period.
In conclusion, the gas scheduled for the Gas Authority in January 2026 was done so to meet its operational needs and its consumer demand. CNNGA’ s operational system and its scheduling met the demands of the severe weather with no outage or pipeline constraints. While GOA gas costs were extremely high for over 9 days, much of the highest price gas was passed on to customers under curtailment who could not completely shut down production. During those 9 days several days saw the Authority deliver close to peak day volumes of more than 18000 Dekatherms per day to its customers. CNNGA did not raise its Board approved rates during January, but it did raise the per Therm cost to the customer to recover the additional charges billed to CNNGA for the gas scheduled and delivered to its city gates. These additional charges were not under the control of the Gas Authority and were driven by the market conditions and national demand. Gas is bought by the Authority’s and sold to large customers in Dekatherms which is equal to 10 Therms of gas. Residential and most small commercial customers are billed per Therm.
Below is a breakdown of how CNNGA calculated the per Therm rate for January 2026.
Standard Rate Per Therm
January Normal Cost of Gas $0.494
Purchase Gas Adjustment for Additional Charges $0.792
Demand Charges for Pipeline Suppliers $0.293
Authority O&M Expense $0.386
Capacity Release Credit $0.386 - $.143
Capacity Credit for Interruptible Customer Use of Firm Supply -$.007
CNNGA Distribution Charge $0.155
_________
$1.97
Many customers have questioned what the Gas Authority may have done differently. The Gas Authority continues to challenge itself to answer these same questions. Our Board of Directors, Management and our staff all know that this increase was a shock to our customers.
We know this has significant impacts on our customers both physically and financially. These costs cannot be absorbed by the Gas Authority, and the decision was made to move forward with billing the usage at the charge needed to recover the dollars spent. Some questioned why CNNGA didn’t spread the recovery over several months to minimize the financial impact on its customers. Several reasons went into the final decision and after much discussion the Gas Authority determined the best course of action was to offer customers payment arrangements to spread out the charges for up to 6 months and bill all usage delivered in January now with the charges needed to recover the costs CNNGA had spent to purchase the gas needed. This reasoning placed the full charges of the gas with the customers that used it and still spread payments over several months to minimize the immediate financial impact on the consumer.
Otherwise, these additional costs would likely be transferred in later months to customers who were already paying their portion for the unexpected increases for the gas which was delivered to them.
CNNGA continues to look for opportunities to minimize its exposure to like events. Increases in gas hedges and less capacity releases could help with rate stabilization during severe events, but that comes at additional costs to normal billable rates. The Gas Authority is analyzing the creation of a rate stabilization fund specifically designed to help offset elevated costs during similar events in the future. In short, the Gas Authority didn’t want this to happen and is committed to making every effort to minimize future exposure.
Please reach out to us with any questions.
Sincerely,
Jimmy Capps
General Manager, Clinton Newberry Natural Gas Authority
