If you are a commercial or industrial customer utilizing End User Transportation service, you purchase your gas through an alternative supplier.
Gas Sales customers purchase their gas through MichCon's Gas Cost Recovery ( GCR) mechanism or through the Gas Customer Choice program.
The market forces of supply and demand determine the price of natural gas and affect the purchase price MichCon or any other supplier will pay for gas. A high demand for gas or a disruption in supply will tend to drive prices upward. Alternatively, if the demand for gas falls or there is an oversupply of gas in the market, prices will tend to move downward. For more information about market pricing go to Chevron Corporation's Web site, thepriceoffuel.com.
The New York Mercantile Exchange (NYMEX) price for gas is considered a national benchmark for gas pricing. The price is based on deliveries to a central hub, the Henry Hub in Louisiana, where many interstate natural gas pipeline systems interconnect and move gas to markets throughout the East Coast, Midwest and Canada.
MichCon's GCR follows the same trend as the NYMEX price, "smoothing out" the peaks and valleys of market-based pricing. The GCR includes the cost of gas plus interstate transportation fees to move gas from major supply hubs (such as the Henry Hub) to Michigan.
| Monthly Gas Price Comparisons ($/Ccf)* | ||
| GCR | NYMEX** | |
| Aug-2007 | $ 0.800 | $ 0.611 |
| Sep-2007 | $ 0.800 | $ 0.543 |
| Oct-2007 | $ 0.750 | $ 0.642 |
| Nov-2007 | $ 0.750 | $ 0.727 |
| Dec-2007 | $ 0.750 | $ 0.720 |
| Jan-2008 | $ 0.700 | $ 0.717 |
| Feb-2008 | $ 0.700 | $ 0.799 |
| Mar-2008 | $ 0.849 | $ 0.893 |
| Apr-2008 | $ 1.005 | $ 0.958 |
| May-2008 | $ 1.005 | $ 1.128 |
| Jun-2008 | $ 1.005 | $ 1.191 |
| Jul-2008 | $ 1.076 | $ 1.310 |
* Assumes 1 to 1 heating content to volume conversion
** Settlement rate for gas futures contract, 3rd business day prior
