I have received several calls and emails from small-business owners and church volunteers asking me what to do about a letter they recently received telling them that as of April 1, they no longer will have the choice of the Standard Choice Offer (SCO) for natural gas.
Here’s what this is about: In January, the Public Utilities Commission of Ohio allowed Dominion East Ohio and Columbia Gas of Ohio to eliminate the monthly default price (SCO), or price determined by an auction, for its commercial or nonresidential customers.
The decision does not immediately affect residential customers. In fact, Dominion has agreed not to apply for any changes to residential markets until April 2015.
Dominion doesn’t provide gas for the SCO and got out of the gas-buying business several years ago. It doesn’t make money on the SCO. But by providing the SCO, Dominion provides a benchmark for customers to compare competitive offers.
I wrote a column Jan. 13 bemoaning this decision by regulators, saying it could start a slippery slope for residential consumers who have been benefiting from low natural-gas rates. It also certainly doesn't help the bottom line for nonresidential and commercial clients — often mom-and-pop businesses or churches, as well as large companies that use a lot of natural gas. To read that column again, you can go to www.ohio.com/betty or the shortcut I’ve created: www.tinyurl.com/bizgas. You also can read about how to change to the SCO, and electricity advice, at www.tinyurl.com/bettyadvice.
As of April 1, if a nonresidential customer does not actively choose a competitive marketer or is not part of a government aggregation, those customers automatically would get assigned by Dominion to one of 17 providers the PUCO approved to offer their company’s own Monthly Variable Rate, also known as the MVR.
The MVR is not regulated and essentially is the monthly variable price chosen by that particular marketer. Often the MVR is the same price as the public variable price offered by the marketers. If you are already on a company’s MVR rate (it will show those letters on your bill) instead of the SCO or a rate you agreed to on your own, then you would remain on that same company’s MVR rate.
By law, the MVR is not allowed to have a cancellation fee or long-term contract associated with it. Most marketers’ own competitive monthly variable rates offered to the general public also do not have long-term commitments or cancellation fees, but definitely double-check that as you do your homework.
Regular readers of my column will know I have advocated for the past two years to go with the SCO, or the monthly regulated rate with an assigned provider from Dominion. That’s because it is a transparent formula, and with wholesale natural-gas rates so low, we haven’t seen any marketers beat the SCO.
However, if you are a nonresidential customer, that SCO choice is going away. My advice is still the same. I don’t think fixed prices offered by the marketers have come down enough to lock in. Some people still prefer fixed rates and are willing to pay a slight premium for that security. I’m OK with that. If that’s the case, just make sure you watch the contract length and cancellation fees.
Even though nonresidential customers can’t get the SCO, you can still use the SCO that residential customers get as a benchmark to see whether the MVR rate you are assigned to or the monthly rates offered by the various marketers are competitive. Because those prices change every month and because the companies don’t share their formulas for how they come up with the price (some may offer low prices for a month or so as a “come-on” rate), it’s frankly a crapshoot whether you will get the better price from the assigned MVR or choosing your own monthly variable. You might want to do one or the other and watch it for a few months before making any final decision.
There are three types of nonresidential customer categories with Dominion: the Energy Choice Transportation Service-Nonresidential, the large volume general sales service and commercial customers.
Large volume and commercial customers tend to be the larger natural gas users who often work with energy brokers to negotiate their own contracts for their usage. The majority of the small businesses and nonprofits, such as small- to medium-sized churches, are likely going to fall into the Energy Choice Transportation-Nonresidential category, said Jeff Murphy, Dominion East Ohio managing director for commercial operations. Murphy also oversees the regulated utilities’ Customer Choice Program for residential customers.
Typically, natural-gas marketers will offer the same or very similar prices to nonresidential customers and residential customers. So a good place to do your comparison shopping is through the PUCO’s Apples to Apples chart (www.puco.ohio.gov) or through the Ohio Consumers’ Counsel's comparison chart (www.pickocc.org). Then you can call the marketer and ask if it will honor the residential rate for your nonresidential business or organization.
The PUCO and OCC charts are updated once a week, but it’s often difficult to gauge the monthly rates because they could change or be old. PUCO spokesman Jason Gilham said the agency is evaluating upgrades to its Apples to Apples charts, including creating a separate nonresidential chart and making the charts more up-to-date by allowing marketers real-time access.
Another point to note: If you are a nonprofit, such as a church, make sure you are not paying for the sales tax on your gas bill. If it is showing you are paying tax, notify your supplier or Dominion to tell them you are tax-exempt.
Residential SCO providers
Speaking of the SCO and residential customers, also for bills after April 1, there will be new SCO providers. Frankly, who your SCO provider is doesn't really matter because they have agreed to charge you the SCO rate. As long as you see the SCO letters (or SSO for the first two months if you are just switching to the SCO), you are fine.
But in the spirit of transparency, here are the names of the SCO providers. You don’t have to do anything, but chances are you will get a new provider as of April 1, as all customers are put back into the mix and reassigned randomly. They are: Constellation Energy, DTE Energy, Hess Corp., NextEra Energy and Volunteer Energy.
Additionally, after the SCO auction, three more suppliers agreed to supply SCO customers at the auction price.
These SCO providers will show up on bills after May 1: IGS Energy, Integrys and Trademark.