Natural Gas

Natural gas purchasing options vary according to a company’s size, location, usage and risk tolerance. RJT Energy’s experts will work with you to determine the appropriate product for your business. Below are the three most common types of natural gas products:

Fixed Price Product.  Requires that the customer take delivery of all the operation’s natural gas needs at a negotiated contract price rate. The negotiated rate includes the locked in commodity rate and the interstate pipeline transportation rate. Companies and organizations that require budget certainty and don’t want to bear the risk of market volatility, are better suited for this product. This is an attractive product for customers that want the most predictability in their energy costs. A fixed price contract is recommended when natural gas prices are low and are expected to increase in the future.

Market Based Product. The market based product locks in the transportation rate for the term of the contract but the monthly settlement commodity rate “floats” on the New York Mercantile Exchange (NYMEX). This settlement commodity rate is then added to the locked-in transportation rate to produce a variable monthly cost of gas rate. At any time during the term of the contract, the customer has the option to convert into a fixed price product. A market based contract is advantageous when natural gas commodity prices are high, and are expected to decrease in the future.

Interruptible Transportation Service Product. Specific natural gas volumes are purchased and are combined with alternative fuel sources to satisfy load requirements. This product is designed for those customers that have the ability to burn fuels other than natural gas and can allow a customer greater flexibility to use the cheaper fuel. The utility, however, will force a customer to use alternate fuels during extremely cold days so there is some unpredictability on natural gas availability in the winter months. In some cases a customer can avoid this by negotiating with the utility to guarantee a certain availability of service.