I’ve been getting phone calls and emails asking about gas prices, gas offers in the mail and aggregation letters for group-buying for gas and electricity.
I have written quite a bit about this, but for the sake of getting everyone on the same page, let’s go over it again and this column might be a good one to clip and save.
Regular readers know that since last fall, I have been on the Standard Choice Offer (SCO) for natural gas through Dominion East Ohio. The utility assigns one of three companies who were the winning bidders in an auction to provide that gas to us at a state-approved formula.
As of April 1, that price is taken from the closing on the third to last day of the previous month’s wholesale natural gas price on the New York Mercantile Exchange (NYMEX) plus 60 cents per thousand cubic feet (mcf). The three providers who should be showing up on your bill in April or May with the letters SCO are: DTE Energy Trading Inc., Hess Corp. and Noble American Gas & Power (customers with Noble will see Emerald Energy on their bill; it is the same company).
Additionally, there are three more companies that agreed to take SCO customers after the initial assignments, also following the same state-approved formula. They are Integrys Energy Services, Interstate Gas Supply Inc. (IGS) and Trademark Merchant Energy LLC (formerly Kansas Energy).
Here’s the bottom line: As long as your bill says SCO, you are good. These names should be the ones showing up in your bills in April or May.
That SCO price is at a 16-year low. For bills printed after April 12, the price this month is $2.79/mcf. The March price was $3.45/mcf.
Wholesale natural gas prices are expected to stay low for a long time, with the mild winter we had and with the increase in natural gas production.
The price since I went to the SCO in the fall has dropped from $5.37/mcf in August to the current $2.79/mcf.
We’re in a good spot with the SCO and unless I see competitors’ offers that would beat it, I will stay with it. In the past, there have been some competitors with monthly variable prices below the SCO, but there are none this year.
But the gas industry has competition, so that’s not going to stop marketers from calling or mailing offers to your house. Unless they can beat the SCO, you should not switch. Also, some of the SCO providers might send you a mailing asking you to switch to their own rate and I would caution against that. Staying on the SCO ensures you get the state-approved formula.
Everyone should watch out for letters from your community offering an aggregation, or group-buying rate, for your natural gas. Sometimes aggregations get great prices using that bulk-buying model. But I haven’t seen many that beat the SCO.
Remember, a majority of the aggregations operate on what is called an “opt-out” model. That means it is important to pay attention to letters in the mail. If you are with the SCO and you don’t “opt out,” you will automatically get switched to the aggregation rate. Yes, you can cancel without penalty, but it will be a hassle and you will lose out on a few months of the SCO rate. If you have chosen a provider other than the SCO, you will not get an aggregation letter from your community.
While some consumers don’t like the “opt-out” system, remember that most of the aggregations that were formed in the early 2000 got voter approval. The aggregations usually get a better price if they use the opt-out model, because they have a larger potential pool of customers and better buying power.
If you haven’t switched to the SCO, you should. Check your bill and see how much you are paying. I’ve been surprised at how many people are still locked into rates of $5 to $6/mcf. Find out how much time is left on your contract and if there is a cancellation fee. Some fees can be hefty, which is why 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. So 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 to the SCO. 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,” you should call Dominion to see if something is wrong.
Here is a reminder about letters from FirstEnergy Solutions about electricity. Some people might have received a letter on this subject but thought it did not apply to them.
The electricity market has not developed into as much of a robust market as natural gas, but some competition has started to develop. All of the offers available to the public can be found online at the Public Utilities Commission website at www.puco.ohio.gov. Search for the “Apples to Apples” chart for electricity and then look for Akron’s company, Ohio Edison. You can get a chart mailed to you by calling 1-800-686-7826.
Many communities in 2009 signed on with FirstEnergy Solutions, a subsidiary of FirstEnergy Corp., for multiyear deals.
The technicalities of the offer involve terms called “fixed” and “graduated” percentages leading to what is called the utility’s “price to compare.” That is a number on your bill, based on your usage.
Those contracts have come up for the next opt-out period as well as some pricing changes. Letters have gone out in February, March and April to affected communities. If you don’t opt out, you will be automatically included and you might have already been included in the aggregation for the last three years.
All of the communities involved will receive 6 percent off their “price to compare” starting with the June meter reading. If you were in a community that previously had a graduated discount, your discount will increase.
The new terms are until May 2015 and have a $25 cancellation fee. The discounts are only for about half of your bill, or the unregulated part, so it is not a huge savings. The average yearly savings for a residential customer is about $45, the company has said.
Several readers have asked my opinion about this aggregation offer versus various offers, including AEP, which is offering a fixed rate and Duke, which is offering a 12 percent discount off the “price to compare” if you sign up online.
Unfortunately, unlike natural gas, I’m not able to give you a specific answer on which one is best. Every electricity customer has that personalized “price to compare” based on usage, so the offers mean different things to different users. You will have to crunch some numbers to see if they beat your “price to compare” or FirstEnergy’s discount through its aggregation program. Also, be sure to weigh your savings with cancellation fees (AEP and Duke’s fees are $100).
It’s hard to say what will happen to electricity prices or whether more competitors will come into the market. Everyone must make the best decision he or she can with the information available.
Betty Lin-Fisher can be reached at 330-996-3724 or firstname.lastname@example.org.