Natural Gas Versus Electricity Cost Comparison

Which is cheaper, natural gas or electricity?

The short answer is that natural gas is typically less expensive than electricity.

Because it is more efficient and easier to source, natural gas is the most cost-efficient way to power operations at a facility. It is more cost-effective to acquire, and delivers more therms for a lower price.

But, while electricity fits specific applications better than natural gas does, it lacks the powering or heating-productivity rates of natural gas. Electric energy cannot deliver an equal power capacity to that of natural gas for the same price.

The more complete and meaningful answer is that the cost difference between natural gas and electricity depends.

Energy suppliers need industry-specific data to identify the best solutions for their unique requirements and keep their consumers informed. As a third party that helps your customers manage their energy use and options, you do, too.

When you partner with RateAcuity, we provide essential data insights to keep you and your clients informed. We have the industry data to equip energy management vendors, research companies and other organizations with accurate, accessible information.

Here are four vital points to consider when comparing the cost of natural gas with that of electricity.

Point 1: Natural Gas and Electricity Are Billed Differently

Natural gas and electricity usage are billed differently, making comparisons of the two more nuanced than a simple 1-for-1 comparison. Natural gas is typically billed in therms (a unit of heat equivalent to 100,000 Btu or 1.055 × 108 joules), while electricity is billed in kilowatt-hours (kWh). As a measure of natural gas use over time, a therm is calculated based on the amount of heat the gas can provide per cubic foot. A kilowatt-hour, meanwhile, is the amount of energy an appliance using 1,000 watts needs per hour.

Just remember that no two energy tariffs are the same. One offers Option A, another offers Option B, and yet another one offers Option C. Your job of finding these options manually and making sense of them is difficult and wastes a lot of your precious time. Energy tariff databases like RateAcuity take away your pain by supplying these energy tariff options for you. You never have to hunt for them again. This saves you time and effort.

Point 2: Prices for Natural Gas and Electricity Vary by Location & Sourcing

When you use a web-based national utility rate database like RateAcuity, you quickly discover that prices for natural gas and electricity vary based upon location and sourcing factors. For natural gas, prices change based on location, transportation requirements and sourcing availability. For electricity, fuel costs, sources for generation, and power plant availability cause pricing fluctuations.

When calculating gas and electric bills, providers will measure your customers’ usage. They may need to adjust billing depending on these outside factors and the energy resource’s heating power.

Point 3: Natural Gas and Electricity Vary in Efficiency

Electricity and natural gas vary in efficiency due to how they’re generated and used. Electricity loses a significant percentage of energy during power generation, making it less efficient than its counterpart.

Meanwhile, natural gas is highly efficient because it requires considerably less energy to extract from its source and deliver to a consumer. While electricity is necessary to power specific applications, natural gas is often more efficient overall.

Point 4: Natural Gas and Electricity Produce Different Emissions

Another critical factor relating to comparisons between electricity and natural gas pricing is environmental emissions. Electricity emits higher greenhouse gases along with sulfur dioxide, mercury and nitrogen oxide emission. Natural gas creates no mercury emissions and lower levels of greenhouse gas, nitrogen oxide and sulfur dioxide emissions. One crucial factor to consider, though, is that electricity tends to be safer for commercial properties.

How Much Are You Currently Paying?

Before you can make an informed decision about whether natural gas is cheaper than electricity for your purposes, and vice versa, you must first discover what you are presently paying for utilities. Here’s how to find out.

ElectricityNatural Gas
Add these costs Energy charge
Demand charge
Interim rate adjustment
Environment improvement
Fuel cost adjustment
Resource adjustment
Delivery charges
Cost of gas in therms
Interim rate adjustment
Calculate how much you are paying per unitAdd the total number of kWhs and divide the sum by the total cost (above)Divide the sum total of costs (above) by the total therms to identify the rate per therm

Easily Compare Natural Gas and Electricity Costs with RateAcuity

If you’re looking for trusted resources to keep your company and your clients informed, count on RateAcuity for in-depth data insights—faster. With years of experience in the field, we make critical information accessible for your analysis, management, and research. Explore our services and contact us with any questions today.

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