How the SSO Price is Determined

The auction determines one component of the SSO – the Retail Price Adjustment. The February 2010 auction resulted in a Retail Price Adjustment of $1.93 per thousand cubic feet (Mcf) of natural gas. This rate will be in effect from April 2010 through March 2011. The Retail Price Adjustment represents the supplier’s non-gas costs of doing business.

The other component of the SSO is the market price for natural gas. It is reset monthly as market conditions change. Natural gas, like other energy commodities, is traded every business day on the New York Mercantile Exchange, also known as the NYMEX. Near the end of each month, a month-end “settlement price” is set for natural gas on NYMEX. The SSO is determined by adding the Retail Price Adjustment to the NYMEX month-end settlement price.

The Current Standard Service Offer (SSO) Price
The table below shows the current SSO price, the typical residential customer’s expected gas usage and a projected total bill, which includes Columbia’s service and delivery charges and all taxes.

July 2010

Market	Retail Price	SSO - Mcf	Ccf	SSO - Ccf	Average Usage	Total Bill **
Price *	Adjustment *		Conversion
$4.717	$1.93	$6.647	div. by 10	$0.6647	17 Ccf	$34.18

*Market Price and Retail Price Adjustment are listed in dollars per thousand cubic feet (Mcf). Columbia bills customers per hundred cubic feet (Ccf).
**Includes Columbia service and delivery charges and all taxes.

*Helpful Hint:

NYMEX natural gas prices are set on energy value and reported in dollars per Dekatherm, or Dth. Columbia Gas bills are calculated per 100 cubic feet, or Ccf. The Retail Price Adjustment converts the NYMEX rate in dollars per Dth to a volumetric rate in dollars per Mcf. To convert Mcf to Ccf, simply divide by 10. For instance, if the NYMEX settlement price is $5.00 per Dth, and the Retail Price Adjustment is $1.93, the resulting SSO Price is $6.93 per Mcf, which converts to 69.3 cents per Ccf.

For more information, check out our SSO Questions & Answers