Consider this column more than you ever probably wanted to know about natural gas and electricity — or everything you already know on the subject since I’ve addressed it before.
But let me answer a quick question that I get a lot:
No, you haven’t missed my “annual” gas comparison chart researching the various offers for natural gas suppliers to heat our homes this winter.
I am staying on what’s called the Standard Choice Offer (SCO) from the assigned provider through Dominion East Ohio, so there’s no reason to compare offers in that large chart.
The SCO is still the best, in my opinion, and fixed prices still aren’t competitive enough to make me want to switch.
This will be the third winter I’m staying on the SCO, the monthly variable based on a state-approved formula. Supply, especially with shale gas drilling and less reliance on the Gulf of Mexico, has continued to be good and prices have remained low and are expected to stay that way for quite a while.
So stay the course and stick with the SCO. If you aren’t on the SCO and want to be, I’ll go into more detail below. Also, if your community is offering an aggregation price, keep reading.
For electricity suppliers, the answer isn’t so simple.
Everyone’s usage is different and Ohio Edison figures out your personalized “price to compare,” so it’s more an individualized decision.
That “price to compare” is based on your usage and the price that you would have to “beat” in order to save money. Many consumers are likely already on an aggregation deal through your community saving some money and the portion of your electricity bill where you can shop is about half of your bill.
So that’s the advice heading into cooler temperatures for 2013.
For those interested in a breakdown, here it is:
• Natural gas
We’ve had a good year under SCO prices, which have ranged from a low of $3.23 per thousand cubic feet (mcf) last September to a high of $4.75/mcf this summer.
It’s currently $4.17 for bills generated after Sept. 13. If you average out the price over the last 13 months, it’s $4.13/mcf.
Fixed rates have generally been in the high $4/mcf to high $5/mcf range. This week’s research by the Public Utilities Commission of Ohio, called the “Apples to Apples chart,” has the lowest price with Ohio Natural Gas at $4.37/mcf, but it’s only a six-month rate and carries a $75 cancellation fee. If you do take that rate, stick it out for the six months. The highest rate is $5.99/mcf from two different marketers for three years with $75 and $100 cancellation fees.
The SCO rate is compiled by using the settlement price on the third-to-last day of the previous month on the New York Mercantile Exchange (NYMEX) plus a figure called an “adder” that is determined each year by auction, about February or March, for the following year. The adder is 60 cents/mcf.
I occasionally hear from consumers who worry when they see that the SCO price, which we report around the 10th or so of each month, has gone up or down slightly. Sometimes the prices are higher than a year ago.
It’s understood that a variable rate can have ups and downs. There is a difference between the SCO and a marketer’s own variable rates, which don’t follow any public formulas and can change at any time. In the spring and summer of 2012, wholesale prices dipped to record lows (the lowest was $2.64/mcf in May 2012). So while prices are still low (remember the years of $9.99/mcf and as high as $15 and above?), they aren’t as low as last year, but they are still good prices.
Could we look back in four years and see that what seems high now for the three-year contract of $5.99/mcf was a good deal? Perhaps. But frankly, I’m comfortable sticking with the SCO now while the prices are low instead of locking into a rate that is $1.82/mcf more.
If you haven’t switched to the SCO, check your bill. If you are still on a fixed rate, or higher than the SCO, find out how much time is left on your contract and if there is a cancellation fee. Some fees can be hefty. I was always leery of choosing companies that had a high fee. But you will save money even after taking the cancellation fee hit with the SCO.
The average household uses about 100 mcf a year on gas. Take the difference between the prices and multiply by 100 to see the savings.
To switch to the SCO, call Dominion at 800-362-7557. Tell them you want to cancel your current provider and switch. You have to ask for the SCO, or Dominion will move you to what’s called the Monthly Variable Rate (MVR) by the third month instead of the SCO, and that is whatever price the provider wants to charge you and not the state-approved formula.
It will take up to two billing cycles for you to see the switch, first to what is called an “SSO” (which is the same price as the SCO). Then by the third month, you should see “SCO” on your bill with a provider’s name. If you see “MVR,” call Dominion.
During the time you have the SSO, don’t worry that the price looks higher. Despite my advocating for Dominion to change their bill, Dominion does not give you a separate line item for delivery charges, so that SSO price includes both the SCO and delivery charges, which everyone pays. In small print, it will list the SCO price.
Many communities have been sending out notices of their aggregation or bulk buying prices for natural gas. Most communities lock into a fixed rate. In making your decision, remember aggregations, which were approved by ballot measures, do not have cancellation fees or they are low at about $25. If you do not want the aggregation offer, “opt out” by either sending in a postcard if one was sent to you or call the number listed. If you do not opt out, you will automatically be included. If you are an SCO customer, even those we “chose” that, it is still considered the default choice, so you will get included in an aggregation, unless you opt out. Make sure to keep a lookout for those notices.
If you inadvertently get switched to the aggregation, call Dominion and say you want to switch back, but you will have to go through the process to switch.
• Opting out
Customers on the SCO or those who don’t have their own contract with a natural gas provider are automatically included on lists Dominion is required to share with retail marketers and aggregation groups. If you don’t want on those lists, opt out through Dominion. Go online to www.dom.com, call 800-362-7557 or write Dominion at Box 5759, Cleveland, OH 44101-0759.
This doesn’t mean all gas offers by mail will end. I still get some offers and I suspect it’s because I’m on company mailing lists from being a former customer.
• Do research
Offers for natural gas and electricity are posted online at the PUCO’s website, www.puco.ohio.gov. It’s called the “Apples to Apples” chart. Or call 800-686-7826 and request one be sent to you.
• Business/nonprofit accounts
If you are a small business or nonresidential account, such as a church, as of April 1 of this year, you no longer have the option of choosing the SCO.
The PUCO allowed Dominion to eliminate the SCO for commercial or nonresidential customers. The decision does not immediately affect residential customers and Dominion has agreed not to apply for any changes to residential markets until April 2015 at the earliest.
For those customers who can’t get the SCO, you are getting a Monthly Variable Rate (MVR), which is a non-regulated monthly variable if you haven’t made your own choice. While it’s not as ideal as an SCO, it’s still based on the low wholesale rates.
My advice would be the same, to stick with variables based on the current market, unless you are a large volume user and want some stability for your budgets.
For electricity, everyone has an individualized “price to compare” figure each month that is calculated based on usage. That “price to compare” wording can be found on your bill on the left side under “messages.” It is the price that you would have to beat to save money.
What is best for you might not work for someone else. You have to assess risk and consider the wild card of energy prices in general.
The “price to compare” changes monthly. There are summer and non-summer rates for Ohio Edison. So take a look at a few different months’ figures.
Only part of an electric bill, called the generation portion, is “shoppable.” That’s about 55 percent of your bill. The other 45 percent is set by regulators and cannot change.
If you are currently on an aggregation with FirstEnergy Solutions, you are getting 6 percent off your “price to compare” through May 2015 with a $25 cancellation fee. People with that offer are actually in the third year of a nine-year deal through 2018. You will have the 6 percent off for the remainder of the term. The aggregation has an opt-out policy, meaning you were automatically included unless you opted out. So by law, you are allowed to leave for free every three years. That’s why the 2015 date is in place.
Many marketers have electricity offers. They can be found online at www.puco.ohio.gov. Keep contract length and cancellation fees in mind. I have also had some reports from readers that some marketers will match or beat prices from other providers to keep customers, but it has been hit or miss.