Estimating Natural Gas Burner Tip Prices for California and the Western United States - Final Project Report

Cover of report

Publication Number: CEC-200-2014-008
Report Date: November 2014

Estimating Natural Gas Burner Tip Prices for California and the Western United States
Final Staff Report. (PDF file, 57 pages, 3.8 megabytes).

Final Summary (PDF file, 2 pages, 314 kb)

Model in Microsoft Excel (Excel file, 5 megabytes)



Natural gas burner tip prices, as estimated in this report, attempt to account for the cost to procure and deliver gas to a natural gas-fired electric generator. Burner tip prices include both a commodity and a transportation component. The commodity component is the price of natural gas after production from the well and processing for injection into a nearby utility pipeline. The transportation component is the cost of transporting the gas from the injection point near the production basin to the electric generator for consumption.

Estimated future burner tip prices are used for electricity resource planning. Fuel to run gas-fired turbines is a major portion of the overall cost of operating these generators. These fuel costs therefore affect decisions on the types of electric generation and infrastructure that are built.

The method for estimating burner tip prices uses forecasted annual natural gas commodity prices from the 2013 Natural Gas Issues, Trends, and Outlook Final Staff Report and transportation rates from interstate, intrastate, and utility level transportation rates. The method first converts annual forecasted natural gas commodity prices to monthly values. Then, the appropriate transportation rate (tariff) is added to account for the price of transportation to the electric generator.

There are some potential uncertainties when estimating burner tip prices. Environmental regulations, changes in supply and demand, and the price of alternative fuels will affect the future commodity price of natural gas. The cost of transporting natural gas may also change based on environmental policies, pipeline infrastructure additions and repairs, and shifts in supply and demand.