PA natural gas supplier consumer choice question

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Old 10-02-08, 07:43 AM
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PA natural gas supplier consumer choice question

Hi all,
Does anyone have any insights on determining savings of selecting your natural gas supplier? In PA, the state deregulated some 10 years ago and periodically I get offers from other natural gas suppliers about "savings" I can lock in for 2 years but often the prices haven't been that much lower than what I pay to Columbia Gas Co. -- often times the rate with Columbia fluctuates even lower than the lock in rate.
But I received an offer yesterday from Dominion Peoples indicating I could lock in for $1.099 ccf vs. the $1.437 I'm paying with Columbia. So, I'm trying to get some idea of how to evaluate this for savings.
Any comments on Dominion Peoples as a company or on gas rates/rate change projections in your area also appreciated.
Thanks,
Greynold99
 
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Old 10-02-08, 08:08 AM
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I am assuming Columbia Gas Company owns the gas mains and provides the metering and service to your house. Then the offers for service from the other gas companies merely enable them to transport their gas through Columbia's lines to your house? If so, you need to figure in the fact that Columbia will remain the physical utility that maintains the distribution system and metering, checks for leaks, reads the meters, etc. Even with a different gas provider, Columbia is still providing a significant service to you, and must charge a fee, even if the gas isn't actually "theirs". So you need to make sure the secondary supplier's rates IN ADDITION to the delivery charge Columbia must still charge is significantly cheaper than Columbia providing the total service.

As I mentioned earlier, this is assuming there is only one natural gas distribution system in your neighborhood and it is owned and operated by Columbia. I'm presuming that Dominion Peoples does not also have a parallel natural gas distribution system in your city and you physically disconnect your service line from Columbia and reconnect to Dominion Peoples.
 
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Old 10-02-08, 08:54 AM
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Reply to Beachboy

Beachboy,
You're absolutely correct. Everything except the Gas Supply charge will remain with Columbia Gas and as far as I know, the misc. fees/charges for gas delivery remain the same regardless of gas supplier. This is the thing I've never really understood about the whole natural gas deregulation setup and how it has been touted by the state PUC as being able to save you money. How can I lock in a rate, currently some $.35 cheaper than what Columbia sells it for? Then, for 2 years and according to the offer I received from Dominion Peoples, I can exit out at any time with no penalty. To me that represents significant savings unless the price of NG drops below a dollar, which it has done but not for any significant time in recent history. Columbia's rates reset every quarter I think.
What do you think or better yet can you explain what's really going on as to how Dominion Peoples can do it? Like I said, all of these offers in the past have not really offered any savings since they come out when Columbia's rates are highest and in the next 3 quarters, Columbia's rates have been typically lower. I've just never seen this big a spread in the offer before.
Greynold99
 
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Old 10-02-08, 10:07 AM
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I'm not sure how Dominion People's can do it either. They obviously locked in on a gas futures contract at a good price. But with natural gas predicted to double in price in some places this winter, I don't know if they will end up in a losing situation or what. I'd recommend you also visit with Columbia and let them know about Dominion's proposition, and see if Columbia can match or better it. Since you're in a deregulated environment, its possible Columbia might have some latitude to adjust its prices in order to retain existing customers.

I've seen other gas utilities that operate in a regulated environment attempt to do a similar thing by trying to get customers to sign up for a "level payment" plan that guarantees monthly bills remain the same. I had one such offer, and when I did the math based on the prior year's consumption, I ended up saving a couple hundred dollars by staying with my current "pay for what I use at the current price" plan. It all looks like its a calculated gamble to me. I would presume Dominion has enough of "fudge factor" built into its rates to account for ANTICIPATED rate hikes. But I imagine there is some sort of hidden "escape clause" that lets them revoke the two year guaranteed price if wholesale gas rates skyrocket higher than anticipated.
 
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Old 10-02-08, 11:44 AM
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PA natural gas supplier consumer choice question

Dominion may be betting on the price going down and they will be able to make money on the locked in price.

Columbia's price may be based on the recently high prices that seem to be coming down.

Is dominon pushing to get people to sign up very soon?

Natural gas (being fuel) is somewhat linked to petroleum prices. A month or so ago I paid $4.39/gal for gas and today I saw some some for $3.16 (without extra coupon discounts that we find). The old Dominion price (that can fluctuate slowly) may have been set when gas was $4.39.

As an earlier poster said, it is a guessing game. Around here we have the option of locking in an annual natural gas price with the gas utility/company and the people that did that ended up paying more than the variable utility price for the last 2 years.
 
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Old 10-02-08, 01:12 PM
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Reply to ConcreteMasonry

Thanks for your reply and insight. I'm going to have to go through my gas supply charges to see how they've varied over the past year or so. I still don't think they've been any lower than a $1.09 ccf for any time recently. I find the natural gas pricing more mysterious in how it's set than the gasoline prices.
The deadline that Dominion Peoples set was October 30.

I also found your comment on gasoline price interesting too.
We never got as high in our SW PA region as $4.19/gal ($4.11 back in July) and mostly have been running ($3.79 - $3.99) until recently when the price has fallen to $3.54 in the last week. The thing is, when oil was priced as low per barrel as it is now, the gas price was under $3.00 a gallon. Strange how the gas price path down is not near the same as when the crude oil price per barrel was rising.

Greynold99
 
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Old 10-06-08, 08:43 AM
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Update on gas cost review for last 2 years

On going over my gas supply charges for last year and 9 mo.s of this year, I've decided to wait on the 2 year committment. It turns out for 2007 the charges varied from .77 ccf - 1.34 ccf and for the 9 mo.s this year, .84 ccf - 1.43 ccf.
In fact, on the news from date of my last post there was a TV news segment from the consumer issues reporter on this very offer.
What is funny, I noticed that the higher gas costs were associated more with declining-usage months rather than with high-consumption months like Jan-Mar. And our rates just renewed for 1.31 ccf for October adjustment -- so with price of all other energy going down (at the moment), I'm hoping the gas supply will follow as someone mentioned that connection in an earlier reply.
Thanks again,
Greynold99
 
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Old 10-06-08, 09:24 AM
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Good to hear! Glad you stopped to research the "deal" a bit before just jumping on board.
 
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