As a business owner, you’ve probably reviewed the natural gas portion of your energy bill and wondered what the terminology means and how it relates to your final bill.
In most cases, your natural gas meter measures usage using one type of measurement whilst you are billed based on another, which of course can be confusing.
This leads to one of the most common questions related to natural gas billing which is “why am I billed in dekatherms (Dth) but my meter measures in Mcfs?”
In this article, we answer this query and help you better understand what a dekatherm is, how you are billed, and what the different variables mean.
What Is a Dekatherm?
A dekatherm is a unit of energy that is equal to one million British thermal units or ten therms. Primarily used in the natural gas industry, dekatherms measure the actual heating value of a specific volume of natural gas.
Overview of Natural Gas Terminology
To better understand what a dekatherm is, we need to put it in the context of other measurement units found on your energy bill. As we get deeper into this topic, the glossary below will be a helpful resource to reference.
- Volume Measurements: Any measurement that describes a certain amount of gas.
- Energy Content Measurement: Any measurement that describes the amount of energy that can be produced from a given volume of gas.
- Ccf: A volume measurement equal to 100 cubic feet.
- Mcf: A volume measurement unit equal to 1,000 cubic feet.
- British Thermal Unit (Btu): A heating content measurement traditionally defined as the amount of heat needed to raise the temperature of one pound of water one degree Fahrenheit.
- MMBtu: One million Btus.
- Therm: A heating content measurement equal to 100,000 BTUs.
- Dekatherm (Dth): Heating content measurement equal to ten therms.
Difference Between Energy Content and Volume
As mentioned above, natural gas is measured in two ways: by volume and energy content. The volume describes the overall amount of natural gas coming into your business while energy content describes how much actual energy you’re able to use from that amount of volume.
Not all natural gas is created equal, it depends on how and where it is processed. Therefore, the volume of gas you use doesn’t always correlate with the amount of energy that you’re able to use.
Most utility companies bill based on the energy content of the gas they use in dekatherms instead of on the volume of gas that their meters track in Mcfs. Dekatherms are a better measurement of the energy the customer uses than Mcfs because they more accurately reflect the differences in natural gas usage caused by a number of variables including:
- Gas temperature
- Type of pipeline
- Where the supplier is located
- Chemical composition of the gas
A change in energy content can result in a customer consuming higher or lower volumes of gas to deliver a given amount of energy. For example, customers in areas that receive natural gas with a lower energy content use more gas than customers in regions receiving natural gas with a higher energy content to achieve the same results.
How Dekatherms Are Calculated on Your Bill
Since the energy content of gas differs based on the variables described above, you can’t simply convert Mcfs directly to dekatherms without taking into account the energy content measured in Btus.
The equation you would use goes as follows:
# of Mcfs (volume) X Btu (energy content factor) = dekatherms
In most cases, your natural gas supplier will automatically do these calculations for you. But there are situations where it is helpful to understand this conversion equation to figure out the total amount of dekatherms your business uses in a given time period if your vendor doesn’t directly provide this information.
Take Control of Your Natural Gas Costs Today
Gaining an understanding of natural gas terminology and how it’s billed is a good first step to better managing utility expenses, but it’s just a small portion of what you need to pay attention to in order to start cutting costs.
In such a complex industry, it usually takes a full utility cost audit to uncover the various ways you may be overspending in this cost category. Many businesses think they have people in-house monitoring costs, but it’s unlikely that utility auditing is their core competency.
Luckily, at P3 Cost Analysts, we have a team of industry experts able and willing to work through a detailed audit of your energy and natural gas spending. If you’re interested in learning more about this process, feel free to reach out to us today.