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Understanding Your Natural Gas Bill

What a Gas Cost Adjustment Means and What Changes Have Been Made to Protect Consumers

Background
Wholesale natural gas prices were deregulated by the federal government in the 1980s and 1990s. Neither the Public Utilities Commission nor the regulated gas utilities have control over wholesale gas prices. Utilities obtain their gas supplies in this unregulated market and pass these costs on to their customers on a dollar-for-dollar basis. Because this is an international market, prices are influenced by both regional (large storms) and global (wars and conflict) events. While utilities do not make any profit from the resale of the natural gas commodity to its customers, they do use several price mitigation strategies – such as storage, financial hedging, and long-term contracts – to try to keep gas costs stable.

After natural gas prices spiked in the winter of 2022/2023, Governor Polis and the state legislature directed the PUC to take additional measures to protect consumers from high and volatile natural gas prices. As a result, the PUC implemented a short-term price cap on the commodity cost for each natural gas utility in Colorado. When wholesale prices exceed this cap, a “rainy day fund” is used to cover these costs. The rainy day fund is in turn funded when gas prices drop below a certain floor–meaning that consumers continue to pay costs at the floor price and the difference between that floor and actual cost is put into the fund. The PUC set a not to exceed amount for each gas utility’s rainy day fund and utilities must contribute interest to these accounts.

Components of a Gas Bill
Typically, your natural gas bill presents the commodity cost of the gas consumed each month as its own line item on the bill. This portion typically accounts for 65-75 percent of a customer’s bill and can be more when prices and consumption are higher. The other lines on the bill reflect your share of costs associated with building and maintaining the physical infrastructure needed to deliver the gas (pipes, meters, and other facilities), administrative costs, and costs to fund specific Commission-approved utility programs such as increased investments in pipeline safety and measures to promote energy efficiency.  

Commission Rules require Colorado’s regulated gas utilities to adjust retail gas prices on a quarterly or semi-annual basis to reflect changes in wholesale prices. These changes are called the “gas cost adjustment” (GCA) and must be approved by the PUC. Although quarterly adjustments are the most common, all utilities are allowed to adjust prices more frequently when unexpected changes occur – such as a sharp spike in wholesale natural gas prices.

What Can Consumers Do to Manage Higher Gas Bills? 
Here are some steps that consumers can take to manage winter gas bills:

  • Reduce gas consumption through conservation, weatherization or by converting appliances to electric. Many rebates and other assistance programs are available now to defer the costs of these measures.  For information on specific programs offered by your utility contact them or visit the Colorado Energy Office’s website.
  • Take advantage of energy bill assistance programs. Information is available at:
  • Change your bill payment plan with your utility. Most utilities allow consumers to establish average monthly payments or make other arrangements to even out bills. Contact your utility for more information.