Resort natural gas layered purchasing scenario

What is assumed about the resort and its gas service?

This illustration uses a hypothetical resort in the Nicor Gas delivery area in Illinois. Assume its account is eligible for the relevant customer-choice or transportation arrangement after the actual classification, metering, and terms are verified. There is no real resort, supplier, purchase, or result. The example demonstrates commodity-layer arithmetic rather than documenting a transaction or recommending a market entry date.

Illinois Commerce Commission natural-gas authority information, reviewed October 12, 2026, identifies regulated utility and supplier arrangements. Nicor’s business rates and riders provide the local tariff source for account review. Neither source supplies the invented commodity prices below or establishes that every resort can use the same purchasing structure.

Here, layered commodity purchase means an assumed arrangement that fixes specified portions of a forecast at separate decision points while leaving the remaining quantity indexed. The bills hub explains the distinction between purchased supply and utility delivery. Actual offers must state the product, quantities, delivery months, covered components, and treatment of deviations.

Which quantities and components are teaching inputs?

Assume a forecast of 2,000 Dth for one resort operating month. Assume the first layer fixes 600 Dth at $4.20 per Dth, and the second fixes 800 Dth at $4.80. The remaining 600 Dth is purchased at an assumed index commodity component of $4.00 per Dth. All prices and quantities are invented, with no live quote, historical trade, or forecast implied.

Assume a separate basis component of $0.70 per Dth and a disclosed brokerage fee of $0.10 per Dth on the full delivered quantity. The example holds both constant solely to isolate commodity changes. It excludes utility transportation, balancing, taxes, fixed account charges, and other items. It also assumes these are compatible components under an illustrative arrangement; an actual supplier must establish the applicable structure in writing.

DOE’s natural-gas bill guide explains gas units and billing concepts. One Dth equals ten therms, so the 2,000 Dth forecast is 20,000 therms. The layers are 6,000 and 8,000 therms, leaving 6,000 therms indexed. Quantity conversion must be matched by price conversion before comparing a per-therm offer.

How does the base layered calculation reconcile?

The first commodity layer costs 600 × $4.20 = $2,520. The second costs 800 × $4.80 = $3,840. The residual commodity costs 600 × $4.00 = $2,400. Total commodity is $8,760 for 2,000 Dth. The assumed fixed layers cover 1,400 Dth, or 70% of forecast quantity; 30% remains indexed in this scenario.

Basis adds 2,000 × $0.70 = $1,400, and the separate brokerage fee adds 2,000 × $0.10 = $200. Total illustrated supply components are $10,360. Their effective component is $10,360 ÷ 2,000 = $5.18 per Dth, equivalent to $0.518 per therm. Multiplying 20,000 therms by $0.518 reproduces $10,360.

Do not add the 2,000 Dth basis quantity to commodity quantities when checking delivered volume. It prices the same gas through a different component. Likewise, the fee does not represent another gas purchase. Only the three commodity quantities sum to the physical quantity in this teaching model.

How does all-index purchasing compare at the same price?

At the assumed $4.00 index commodity component, all 2,000 Dth cost $8,000. Adding the same $1,400 basis and $200 fee gives $9,600. Under these specific assumptions, layered purchasing costs $760 more than all-index. The earlier fixed components are above the assumed current index component. Layering is therefore not presented as a method that always produces the lower realized cost.

For an adverse commodity scenario, raise the invented index component to $6.00 while retaining both fixed layers. Residual commodity becomes $3,600, so total commodity is $9,960. Basis and fee remain $1,600, producing $11,560. All-index instead gives $12,000 commodity plus $1,600, totaling $13,600. The illustrated difference is now $2,040 in the other direction.

EIA’s gas-price factors identify supply, demand, weather, and related influences. They do not establish which of these invented scenarios will occur. Do not turn the two results into an expected cost without supported probabilities. The decision concerns how much price exposure the resort retains and which agreement obligations it accepts.

What changes when resort demand is lower or higher?

Keep the fixed 1,400 Dth and base $4.00 index assumption. If actual consumption is an assumed 1,800 Dth, the residual is 400 Dth. Commodity costs $2,520 + $3,840 + $1,600 = $7,960. Basis is $1,260 and the fee is $180, producing $9,400. The effective illustrated component is approximately $5.2222 per Dth.

If consumption instead rises to 2,400 Dth, residual quantity is 1,000 Dth. Commodity costs $10,360; basis adds $1,680 and compensation adds $240. Total components are $12,280, or approximately $5.1167 per Dth. Dollars rise while the effective unit component falls because additional gas is priced below the weighted fixed layers in this assumed base case.

These volume scenarios assume the agreement allows the stated residual purchases without another adjustment. They do not establish unrestricted volume flexibility. If resort consumption falls below 1,400 Dth, the example’s nonnegative residual formula is no longer enough. The contract must specify how unused fixed quantity is settled, balanced, or otherwise treated; do not insert an assumed resale credit.

Why is basis separate from the commodity layers?

EIA’s explanation of basis differentials, published in 2020, supplies the enduring concept of location-price differences. Its historical market values are not used here. The assumed $0.70 basis is a worksheet input rather than a current Nicor-area differential. Confirm the actual delivery point, index, components, and any fixed-basis treatment in the offer.

For another sensitivity, increase assumed basis from $0.70 to $1.20 per Dth while keeping the 2,000 Dth base commodity calculation unchanged. The difference is 2,000 × $0.50 = $1,000, so total components become $11,360. Fixed commodity layers alone would not prevent that modeled change if basis remained variable under the agreement.

Keep any utility transportation and balancing items in their own lines. A commodity component and a location basis do not necessarily cover every cost to serve the account. Review Nicor’s applicable tariff and the commercial agreement before identifying the complete gas-cost boundary. A resort with pools, spa hot water, or seasonal buildings needs a forecast tied to actual equipment and opening schedules.

What makes a layered decision reviewable?

1. Verify the legal customer, service classification, transportation eligibility, and approved supply structure.
2. Reconcile the monthly forecast in one energy unit and retain conversion formulas.
3. Record each layer’s quantity, delivery period, covered component, and decision authority.
4. Test index-price, basis, and volume changes separately, including a shortfall below fixed quantity.
5. Disclose embedded or separate compensation and include it once.
6. Reconcile deliveries, settlement, and the first invoice against the agreement and actual account data.

The Maine winter-gas example emphasizes location and weather sensitivity. The New York water-heating example changes fuel requirements, while the five-property purchasing example emphasizes account-level allocation. Their assumptions should not be imported into this resort’s gas layers without a separate review.