Commercial Gas Budgets | Monthly Forecasts & Variance

Build a monthly variance bridge

Use the seasonal budget tool to weight monthly prices by monthly consumption. Keep a base case and an operational change case, and identify who may revise each assumption.

Worked example: separate volume and price variance

Assume a hypothetical monthly budget of 1,000 therms at $0.80 per therm and actual usage of 1,200 therms at $1.00. Commodity cost rises from $800 to $1,200. At the budget price, the extra 200 therms explain $160. Applying the $0.20 price increase to actual usage explains another $240. Together those effects reconcile the $400 difference.

Fixed fees, utility delivery and taxes are outside this example and need their own lines. This ordering allocates the interaction between volume and price to the price effect; another consistent method can allocate it differently. Record the method so monthly reports remain comparable. If the actual invoice contains an estimate or prior-period correction, reconcile that item before using the variance to evaluate procurement performance.

Use three linked schedules instead of one blended estimate

EIA identifies production, storage, weather and demand among price drivers. A useful business budget records those uncertain price assumptions separately from a facility’s consumption forecast. Keep one monthly volume schedule, one price-component schedule and one fixed/retained-charge schedule. This lets finance change a price assumption without accidentally changing the operating plan or treating a utility delivery charge as a supplier charge. EIA: supply, demand, weather and storage price drivers.

Close each month with an explainable variance

For comparable commodity costs, calculate a volume effect at the budget price, then a price effect on actual volume. These two effects reconcile the commodity difference without an unexplained interaction remainder. Add recurring fees and other changes separately. Preserve accruals and corrected bills so a timing difference is not reported as a procurement result. Record whether each volume is therms or a converted billing quantity. EIA: natural gas volume, heat content and energy units.

A budget revision protocol for a changed operating plan

If opening hours or production change, retain the original approved forecast and create a revised quantity schedule with an effective month. Reprice the revised quantities under the existing agreement before evaluating a new offer. This separates the operating change from the procurement decision. Assign an owner to explain unusual consumption, accruals and rebills before the next forecast is issued. A budget review should be able to conclude that no supplier change is needed while still correcting a material quantity or fee assumption.

Use the appropriate planning tool

Monthly gas budget: Enter all twelve monthly quantities and price assumptions; reconcile the result to the separate fixed-charge and delivery schedules.