If you have read this annual comparison of natural gas prices for the last 11 years, you know I’m a careful decision-maker.
I’m not a huge risk-taker — unless it’s a roller coaster (and even those must have some type of harness.)
I take time to research and think about my choices, weighing pros and cons. But I can also make a decision quickly after some measured analysis.
So readers know that until two years ago, I was always looking for a fixed, one-year price for natural gas to secure a stable, fair price with a low-cancellation rate for our harsh winters instead of chancing it with monthly variables. I’ve been willing to pay a slight premium for a fixed rate, often above the going monthly variable rate, because prices were volatile and I worried about them spiking during the winter.
But here’s what has changed: The risk of a variable rate has gone down considerably the last few years. With low prices right now at the wholesale level, they’re hard to ignore. Also, the marketers this year didn’t come out with what I would consider spectacular offers.
So I’m staying with the monthly variable price, called the Standard Choice Offer (SCO) through a provider randomly assigned to me by Dominion East Ohio. I’ll keep watching fixed prices offered by marketers, but they would have to come down significantly for me to consider locking in. If I change my mind, I’ll let you know in a Sunday column.
Your decision is based upon your tolerance of risk. Some people have been braver and have done just fine on the variables, perhaps saving some money over what I chose. But there were really volatile years — such as after Hurricanes Katrina and Rita, when monthly prices spiked to $13/mcf and $21/mcf while I had a fixed capped rate of $10.35/mcf that often fell below that. Those were the times when people on variables really got hit.
This year, the premium on the lowest fixed one-year rate is nearly $1/mcf higher than Dominion’s monthly SCO rate, which is set to drop by 51 cents/mcf later this month to $4.86/mcf. The average residential household uses 100 mcf a year, so just based on this one month, that’s nearly a $100 savings if you went with the variable over the fixed rate.
Of course, variables will swing from September’s price. I’m willing to see how it goes and not get nervous if for a few months it goes above fixed prices.
For the last two years, the average monthly variable price with Dominion was $5.43/mcf and within the last year, it averaged $5.18/mcf.
A few marketers told me they couldn’t argue with sticking with the SCO instead of going with their fixed rates or their own monthly variables, which can’t compete with the low SCO “adder.”
In reality, I’ve been getting about knee-deep in the risk-taking waters.
Two years ago, I dipped my toes in by going with a six-month fixed rate. That gave me a stable price to get through the winter and I could go back to a monthly variable rate during the summer, when I was braver and our furnaces were off.
I repeated the same thing last year with a $5.89 per thousand cubic feet (mcf) six-month rate from MXEnergy that came with a $25 gift card, which then equaled a $5.64/mcf rate. (This was a week after my initial comparison, when I chose another company and MX came in later with a better deal.) When it came time for that contract to renew in the spring, I wasn’t impressed with the rate.
Random assignment
So I returned to Dominion East Ohio to allow it to randomly assign me a provider for its Standard Service Offer (SSO) and Standard Choice Offer (SCO), based on a very low state-approved formula until it was time to re-evaluate prices.
There are many people who might prefer a fair, fixed one-year rate with a decent cancellation fee because it offers a feeling of security. Really, this year whether you follow me and stick with the SCO or go with one of these fixed rates, you should be in pretty good shape because prices for both are still pretty low comparatively.
It’s also possible that one-year fixed rates might come down more, based on conversations I had with the various marketers. Some of them said they weren’t yet prepared to go lower, but might do so in coming weeks or months.
So if you’re in the market for a one-year fixed rate or even a six-month rate to get you through the winter (none of the companies had competitive enough rates, in my opinion), you might want to wait. But don’t wait too long.
I’ll update prices if they fall enough to be newsworthy. For those who use social media, you can follow me on Twitter, where I’ll be posting updates.
As of today, the best one-year fixed rate is with Constellation Energy, a large national supplier and a sister company to the regulated Baltimore Gas and Electric. Constellation has been in Ohio for 16 years as a commercial and industrial supplier.
Constellation’s $5.79/mcf, one-year rate with a $25 cancellation fee is available only on the company’s website, http://www.constellation.com. If you don’t have Internet access, ask a relative or friend to help.
Another possibility is Gateway Energy Services’ $6.19/mcf one-year rate with a $50 Visa gift card for new customers via its website and call center (http://www.gesc.com/ohio or 877-326-6806; the call center is closed until Tuesday for the holiday). That would bring the price down to $5.69/mcf, which beats Constellation’s price.
However, the company has a potential $150 cancellation fee because it charges $12.50 for every month left on a contract if you leave early. That’s a high exit fee.
While last year I did take a rate with a $25 gift card from MXenergy and a lot of us had no problems getting our gift cards, there were people who did have problems. The hassle of turning in for a rebate card is sometimes not worth it in the long run.
Dominion’s SCO
If you followed me in the spring and didn’t renew your MXenergy contract and returned to Dominion, your bill should say you are on the SCO with a provider’s name that was randomly assigned. You don’t have to do anything and you will stay with that provider until March, when the next auction for the “adder” price will be conducted and new providers will be chosen.
A new provider will eventually be listed on our bills. The $1/mcf adder could go up or down. But by March, we’re almost out of the winter.
If you need to cancel a contract (check cancellation fees) to return to Dominion, call your provider and say you do not want to renew or you want to cancel. That provider will bounce you back to Dominion. Once you see your first bill that says Standard Service Offer (SSO), that’s when you should call Dominion (800-362-7557) and request that you be put on what is called the SCO.
The SSO and the SCO are the same price and can be confusing, but unless you ask for the SCO, after the third month, your randomly selected provider is allowed to charge you its own monthly variable rate. That is not based on a formula and could be higher.
If you stay with the SCO and your community decides to form an aggregation, or buying group, your account will be included and you will need to opt out if you receive a notice.
If you don’t, you will be automatically included in that aggregation, which could be a higher price.
Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@thebeaconjournal.com. Follow Betty on Twitter at http://www.twitter.com/blinfisher.
