Shopping for gas and electric rates
When was the last time you checked your electric and gas utility rates? You may pay twice as much as you would pay if you called your supplier – or shopped for a competitor – for the best, most recent tariff.
Natural gas prices are very volatile. Tariffs change every quarter. If NYMEX natural gas prices drop, or natural gas futures drop; you could be stuck with the previous, higher tariff, unless you call to ask for the best available tariff each quarter. But be careful when you switch suppliers. There may be hidden charges, such as the “gas cost adjustment charge”, which typically varies between $0.70 and $2.80 per MCF per month. No utility in PA has been able to define this particular charge for me.
Gas rates have dropped significantly in 2009. Unregulated suppliers obviously know to play the game, but residential consumers are not so up to speed, based on my experience and what I am reading: “PUC: Effective natural gas competition doesn’t exist.”
Many consumers have no idea where to start and who to call in order to start shopping for the best competitive supply tariffs. Some utilities have several competitive suppliers of gas or electric. Others only have one supply. Each state is different, and each utility is different.
Further c0mplicating the comparisons in PA, we have that nebulous “gas cost adjustment charge”. As I said, it’s not clear how the utility determines this charge each month, but I do know that it changes monthly or quarterly, and you may or may not have to pay it, depending on which gas supplier you choose. Unfortunately this type of nebulous, hidden charge doesn’t make it any easier for consumers to compare gas tariffs.
As a consumer I would rather see my regulated utility company collectively bargain with the suppliers serving my market and take care of that supply side transaction, to make sure that I the consumer am always getting the best available supply tariff ($/mcf of natural gas), and then simply pass that rate along to me, plus the local distribution tariffs, plus the customer charge. If the supply falls, the price would go up and I would pay it. If they supply goes up, the price would fall and I would pay it. In my ideal system I would always get the market price without me having to work the phones every quarter, sift through the various hidden charges to try to compare and shop for the best supply side tariffs.
But that’s not how the game works. At least, not in most states.
The way it works in most states is that every residential consumer has to work his or her phones, and compare the various charges and tariffs throughout the year, in order to make sure that he or she is getting the best deal at any given moment. Your supplier will NOT notify you if their “going rate” suddenly drops. You have to call them and ask them for it. Or you might find a competitive supplier with a better supply tariff plus charges. They press a button, and voila! Your rate changes! But watch out for those hidden fees! Oh, and don’t forget. You may need to do this for both electric and gas!
There are winners and losers in this game. If you have internet access and patience, you may have an advantage. If you don’t give a damn, you will probably lose given today’s volatile natural gas prices. There are websites to help electric and gas utility customers navigate this mess. For example in Pennsylvania, you can visit a website affiliated with the state Office of Consumer Advocate, where they publish a natural gas shopping guide, updated monthly. And they have a similar shopping guide for electric. I added these links on the EnergyAnalysis links page. These guides are also available in PA by mail by calling 1-800-684-6560.
If you live in another state, do a google search, or call your public utility commission or state consumer agency to find similar shopping guides. Good luck!
Lower your natural gas tariff
Most natural gas customers in the U.S. have the ability to lower their commodity price at any time. There are usually two or three competitors in any given territory, and you can call each of them to get the lowest possible commodity supply tariff at any time, and as often as you wish in some territories. Each supplier will quote you a new tariff (for example $10 or $11 per thousand cubic feet gas) that you may keep for up to 12 months or some specified time frame. If you sign up for a lower tariff with an alternative supplier, your local gas utility monopoly will continue billing you, but your next bill will reflect the lower commodity tariff.
How to shop for lower-priced natural gas
You’ve weatherized your home or apartment but your gas bills still seem high. What else can you do? Yes you can always put on an extra sweater and pair of socks and lower your thermostat a couple degrees. However, you can also shop for lower-priced natural gas…
For information on the status of natural gas residential choice programs in your State, check the EIA’s Status of Natural Gas Residential Choice Programs by State as of December 2007. Click on the link and then click on your state for details.
You may live in a state that has “unbundled” the natural gas commodity from the distribution service. In states with unbundled prices, the sale of the natural gas commodity is deregulated, which means that you can refer to a list of suplliers in your area and find the best deal. It just takes a couple phone calls to check on competitors’ rates, and then you can lock-in to a fixed rate for a year (e.g. $11.99 per thousand cubic feet or MCF of gas).
It’s easy to do. Your local distribution company (LDC) or public utility commission representatives can help you do it. You will save money and rest assured that you are getting the best deal in your area.
In states with complete unbundling, once you choose a gas supplier, your local distribution company will continue to provide local distribution services, as well as a unified billing service for you.
Pa. court rejects request by FirstEnergy utilities to break rate caps, increase electric rates
HARRISBURG, Pa. (AP) — Two Pennsylvania utilities cannot raise electric rates they charge to customers and break the deregulation-era rate caps on the cost of electricity to which they agreed a decade ago, a state judge ruled earlier this month.
Commonwealth Court Judge Rochelle S. Friedman upheld a January 2007 decision by state utility regulators to deny the request by Metropolitan Edison Co. and Pennsylvania Electric Co.
The utilities had argued that they should be able to raise customers’ retail electric rates to reflect the increasing price of wholesale electricity. But Friedman wrote that the utilities chose not to sign long-term contracts that would have locked in all of their wholesale electricity costs over the life of the rate caps.
In 2006, the companies, both subsidiaries of Ohio-based FirstEnergy Corp., asked regulators to let them begin increasing electric rates, instead of waiting until 2011, when the utilities’ rate caps expire.
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EIA: Retail Prices
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