Con Edison Gas Monthly Rate Adjustment
If you are wondering why your Con Ed natural gas bill blew up your budget in May, you are not the only one. The most likely culprit is a delivery line item called the Monthly Rate Adjustment (“MRA”).
Delivery is the portion of your bill that is fully regulated, meaning customers have no choice but to pay the rates approved by the Public Service Commission. This covers the cost of transporting gas from the production source to the end user, including infrastructure maintenance and daily operations.
The MRA is a mechanism that allows Con Ed to recover delivery-related revenue shortfalls. While this “catch-all” line item includes about two dozen contributing factors, the primary driver is weather. For example, during a warm winter period, customers use less gas for heating, which results in a revenue shortfall for Con Ed. On a rolling basis, Con Ed calculates and applies an MRA surcharge to make up for it. Conversely, during an especially cold winter period, the MRA might appear as a credit—though that has been rare in recent years.
In May, the MRA took the form of a colossal surcharge of approximately 70 cents per therm. For context, the MRA alone likely accounted for one-third or more of your delivery cost.
Though this may sound like doom and gloom, there are a few important takeaways that can help mitigate this kind of uncontrollable rate swing:
1. Delivery rates have surged—by as much as 50 to 75 percent for residential heating accounts since 2021. This is a stark reminder that utility costs are on the rise and should be reflected in your budgeting.
2. While the delivery side is regulated, the supply side is deregulated. That means you do have a choice who supplies your energy and the rates you pay. Since Aurora’s inception two decades ago, we have emphasized the value of saving on supply costs through our competitive bidding process with a trusted, fully-vetted network of suppliers.
3. And yes—there is something you can do to reduce delivery costs. While delivery rates themselves are out of your hands, the other side of the equation—consumption—is not. Boiler controls, weatherization, pipe insulation, and other energy efficiency upgrades can reduce gas usage for heating. As delivery rates rise disproportionately, the ROI on efficiency projects becomes even more compelling. And of course with LL97 now in effect, fine avoidance compounds the attractiveness of these type of projects.
Market Analysis
Natural Gas
Natural gas in storage began May below the five-year trailing average, where it had been since this past bitterly cold winter. This key data point is a major indicator of the health of gas supply and ability to withstand a demand spike. Finally out of heating season and into production season, storage levels rose in May to 4 percent above the five-year average. Staying above this psychological threshold likely contributed to the commodity remaining in the low-to-mid $3 per MMBtu range for the entire month of May, following an April settlement (for the month of May) of $3.17.
Electricity
In a continuation of the second half of April, NYISO Zone J averaged approximately $0.04 per kWh throughout May with occasional short-lived weather-related spikes. This sits roughly in line with historical averages for this time of year. As we enter summer, prices will surely escalate once warmer temperatures arrive.
Crude Oil
Following a four-year low of $58 per barrel in April, early May upstaged the record books dipping as low as $56. OPEC’s move to accelerate production increases fueled concerns about a potential global supply surge amid an uncertain demand forecast. The remainder of the month hovered around $60-64 per barrel as fears eased.
💡 Mitchell’s Tip: Reduce consumption through energy efficiency projects.
