Massachusetts Commercial Natural Gas: Surviving the Winter Basis Blowout
For commercial facilities in Massachusetts operating within the National Grid or Eversource footprints, the natural gas procurement landscape in 2026 is defined by severe regional isolation. While national wholesale gas prices (NYMEX) remain suppressed, New England lacks the physical pipeline capacity to import sufficient domestic gas during extended winter freezes. This forces the region to rely on expensive, imported Liquefied Natural Gas (LNG) deliveries to the Everett Marine Terminal to prevent system failures. Consequently, while a business may lock in cheap commodity gas, they are fiercely exposed to "basis"—the astronomical localized markup required to physically transport that gas into Boston when the temperature drops. Concurrently, National Grid continues executing steep delivery rate hikes to fund state-mandated pipe replacement and general decarbonization efforts.
Executive Impact
- →The Algonquin Citygate Premium: Natural gas pricing in Boston is heavily tied to the "Algonquin Citygate" node. During extreme cold, the spread (basis) between NYMEX Henry Hub and the Algonquin Citygate can jump from $1.50/Mcf to over $20.00/Mcf overnight, financially devastating unhedged consumers.
- →Delivery Rate Escalation: Even if a facility manages to secure perfectly hedged third-party supply, the regulated National Grid delivery tariff (the cost to move the gas from the citygate to the facility's burner tip) is increasing by double-digit percentages as utilities amortize the cost of replacing aging leak-prone cast-iron infrastructure.
- →Electrification Pressure: Massachusetts state policy is actively discouraging new commercial natural gas hookups, placing immense pressure on facility managers to evaluate massive capital expenditures for commercial heat pump retrofits.
Securing the Winter Supply Hedges
Because New England's gas constraint is primarily a winter physical phenomenon, procurement strategy must revolve entirely around December-February basis protection.
- Full-Requirements Fixed (NYMEX + Basis): The safest, albeit most expensive, route is a traditional fixed contract where a retail supplier assumes the entire volumetric and basis risk. Ensure the contract explicitly states it is fully bundled with "All-In Basis" included; otherwise, anomalous winter spikes will be passed through to the invoice.
- Winter Peaking Alternatives: Large industrial operations frequently utilize interruptible tariffs combined with onsite fuel oil or propane backup systems. When National Grid issues an Emergency Curtailment Order during a freeze, the facility switches to its backup fuel, avoiding the spot market blowout entirely.
The D.P.U. Default Service Rate Trap
Relying on the Massachusetts Department of Public Utilities (D.P.U.) approved default service through National Grid during the winter is highly risky. Because the utility passes through its procurement costs, the winter default rate historically spikes aggressively right as commercial heating usage peaks, creating a multiplier effect that ruins Q1 operational budgets.