Commercial natural gas supply and contracts

Where business gas competition actually exists

Retail gas choice covers a smaller and more fragmented map than electricity choice, and EIA's own guidance describes the mechanism rather than publishing a per-state list: choice exists where a state has restructured its gas distribution rules, generally for customers of investor-owned distribution companies, and eligibility commonly varies by customer class and sometimes by utility within a single state. Supplier and trade directories that circulate name active commercial markets across states including Connecticut, Delaware, Georgia, Illinois, Indiana, Maryland, Massachusetts, Michigan, New Jersey, New York, Ohio, Pennsylvania, Texas, Virginia and the District of Columbia, with further states offering limited programmes. Each of those names is a starting point for verification, not a guarantee for a particular address. A site can sit inside a choice state and still have no competitive option because it is served by a municipal system or a cooperative, or because its rate class is excluded from the programme.

• Rules vary by state, by customer class, and sometimes by utility within a state.
• Small commercial and large commercial accounts can fall under different programmes.
• Confirm eligibility for the service address before requesting pricing.
• A choice state can still contain municipal systems and co-ops with no programme at all.

What a commercial gas bill separates

A commercial gas bill combines the cost of the gas with the cost of moving and administering it, and the two behave differently. The commodity or supply charge recovers the utility's cost of acquiring gas — wholesale purchases, interstate pipeline transportation to its system, and storage — and for a sales customer the local distribution company passes those costs through rather than earning a return on them. The delivery or distribution charge pays for the regulated local system: mains and service lines, metering and billing, leak detection, emergency response, operations, and the utility's authorised return. That second component is set in a base-rate case before the state commission and does not move with the wholesale gas market. Where a commission's own consumer material puts numbers on the split, they are jurisdiction-specific: Missouri's commission describes the purchased-gas component as roughly half of a typical monthly bill against delivery for most of the rest. That is a Missouri illustration, not a national average, and for any specific account the controlling document is the state-approved tariff and its definitions.

• Commodity or supply: the gas itself plus pipeline transportation and storage, passed through at cost.
• Delivery or distribution: the regulated local system, set in a base-rate case.
• Demand, transportation, balancing and customer charges can each appear as separate lines.
• The commodity-versus-delivery split is tariff-specific; never assume a national ratio.

The purchased gas adjustment, and who regulates it

Between general rate cases a regulated gas utility changes its commodity rate through an automatic adjustment mechanism. The names differ by state — Purchased Gas Adjustment in Oregon, Washington and Minnesota, Gas Cost Adjustment in Kentucky, and clause forms such as New Mexico's PGAC — but the structure is the same two parts. A prospective component recovers the utility's forecast cost of gas, pipeline transportation and storage for the coming period. A retrospective true-up reconciles what was actually collected against allowable actual costs, producing a surcharge when the utility under-collected and a credit when it over-collected. Minnesota's commission describes PGA and GCA filings as automatic adjustments between rate cases; Washington's commission requires a filing at least every fifteen months; Oregon runs an annual cycle with a cost-sharing arrangement for differences between forecast and actual. Regulation is split: the state commission approves the distribution utility's base rates and its adjustment mechanism and reviews prudence, while FERC regulates the interstate pipelines and storage whose charges feed the delivered gas cost under the Natural Gas Act.

• Prospective forecast plus retrospective true-up is the standard shape of the mechanism.
• State commissions approve the mechanism and review prudence; the utility does not profit on prudently incurred commodity cost.
• FERC sets interstate pipeline and storage rates; it does not set the retail distribution rate.
• The mechanism's name and filing cadence are state-specific.

Therms, Mcf, Ccf and MMBtu

Gas is measured in heat content on some tariffs and in volume on others, and the mismatch is a common source of bad comparisons. A therm is 100,000 Btu. A Ccf is 100 cubic feet; an Mcf is 1,000 cubic feet; an MMBtu is one million Btu, or ten therms. The conversion between volume and energy depends on the heat content of the gas delivered, which EIA reports annually — using its 2023 national average of about 1,038 Btu per cubic foot, one Mcf works out to about 1.038 MMBtu, or roughly 10.38 therms, and one Ccf to about 1.038 therms. Those are estimates rather than fixed physical identities: EIA's 2025 conversion basis is nearer 1,037 Btu per cubic foot. The practical rule is to ask for your historical usage in whatever unit the offer is priced in, and to state the basis you are comparing on, because an offer quoted in therms and a bill reconstructed in Mcf are not yet the same number.

• Therm = 100,000 Btu; MMBtu = 1 million Btu = 10 therms.
• Ccf = 100 cubic feet; Mcf = 1,000 cubic feet.
• At EIA's roughly 1,038 Btu per cubic foot average, 1 Mcf is about 10.38 therms.
• Ask for usage history in the unit the offer uses, and name the heat-content basis.

The winter question: peak day, deliverability and storage

For a commercial buyer the annual volume is the easy part; the winter peak day is where supply fails. Interstate gas service is a hierarchy of rights, and firm transportation — a reservation charge plus a usage charge — carries priority over interruptible service, which is priced on usage alone and offered only when capacity remains after higher-priority customers are served. A buyer that cannot hold primary firm capacity may lease released capacity on the secondary market, but release conveys transportation only: the replacement shipper still has to have gas at the receipt point and meet the pipeline's nomination and credit terms. Storage adds two separate things that are often conflated. Working gas is the inventory available over a season. Withdrawal deliverability is how much can come out in a single 24-hour period, and it falls as the facility empties. EIA notes that salt-cavern storage cycles fast — depleting working gas in roughly ten days and refilling in about twenty — while depleted-field storage suits larger seasonal inventories. A site can hold a season's gas and still be short on the coldest morning.

• Firm transportation reserves priority capacity; interruptible service can be curtailed on a constrained day.
• Capacity release moves firm transportation rights on the secondary market, not the commodity.
• Working gas answers the season; deliverability answers the day.
• Reliable peak-day supply is the lowest of contract MDQ, firm pipeline capacity, storage inventory and deliverability, and downstream limits.

ACQ, MDQ and the contract quantities

Gas supply agreements carry quantities that electricity contracts do not, and the abbreviations are contract-specific rather than universal. ACQ, the annual contract quantity, is the committed or target volume for the contract year. MDQ is the maximum daily quantity — what the buyer may take, or the supplier must deliver, on a gas day. A minimum daily quantity is the volume the buyer must take or pay for on a specified day, which is where take-or-pay exposure usually sits. The same letters can describe a right, an obligation or a supplier guarantee depending on the agreement, so read each definition in the contract rather than trusting the industry shorthand. A screening check is to annualise MDQ across the contract days, then test whether ACQ, seasonal limits, pipeline capacity or storage deliverability impose a lower ceiling — because a buyer with ample ACQ but thin MDQ is short on the day that matters.

• ACQ: the annual committed or target volume.
• MDQ: the daily maximum the buyer may take, or the supplier must deliver.
• Minimum daily quantity is where a take-or-pay obligation usually sits.
• Annualising MDQ is a screening test, not an entitlement; other limits can bind first.

Why a gas profile is not flat

Commercial gas demand is strongly weather-sensitive because space heating dominates the winter, and the annual total is a poor description of the shape a supplier must serve. EIA classifies commercial consumers — offices, stores, hotels, restaurants, schools, hospitals and government buildings — at roughly a tenth of US natural gas consumption on a delivered-to-consumer basis, and reports that combined residential and commercial demand is the most weather-driven part of the market. US consumption averaged a record 90.3 billion cubic feet a day in 2024, and EIA logged record monthly consumption in both January and July of that year: the winter record comes from heating, the summer record largely from gas-fired power generation, which is why a commercial site's winter risk is usually a supply-availability question rather than a demand-price one. EIA's heating degree day measure, with a 65°F base, is the standard weather indicator. A fixed unit price for the year protects the rate but not the volume, so a severe winter still produces a larger bill than a mild one.

• Space heating makes commercial gas demand winter-heavy and weather-sensitive.
• The commercial sector is roughly a tenth of US gas consumption on EIA's delivered-to-consumer basis.
• Summer gas demand is largely an electricity-generation story, not a heating one.
• A fixed unit price does not fix the volume you take.

What a supplier needs, and how HighGround handles a request

Gas pricing depends on volume and seasonality, so suppliers work from actual consumption history rather than an estimate, and having the account details and usage ready removes the most common cause of delay. Energy supply is sourced through the Broker Online Exchange supplier network, which covers licensed gas and electricity markets; the services that support the same site — connectivity, communications, security, cloud and software — are sourced through AppDirect, so a multi-site business has one structured conversation about the facility rather than a series of unrelated quotes. Nothing here guarantees a particular supply arrangement: availability depends on the jurisdiction, the utility territory and the account, and an inquiry places no order and switches no supplier.

• Service address and the local distribution company or utility name.
• Account number, rate class and meter number from a recent bill.
• Historical consumption in therms or Mcf, ideally twelve months or more, covering a full heating season.
• Business entity and credit details, and any tax-exemption status.
• Intended contract start date and whether usage is expected to change.
• HighGround may receive provider compensation when a purchase completes; it is disclosed site-wide.
• No order is placed by submitting an inquiry, and the comparison shows proposed scope and term before anything is signed.

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