Last May, Doris Bell answered the door when a natural gas marketer knocked.
He promised a good rate: an introductory offer of $2.50 per thousand cubic feet (mcf) for two months and then the rate would go to the company’s variable rate.
The $2.50/mcf price slightly beat the Dominion Energy Ohio Standard Choice Offer (SCO) price of $2.89/mcf in May, so Bell took it.
She didn’t pay much attention until she noticed in February she was being charged $7.98/mcf. She didn’t know the going SCO rate was $3.02/mcf, so she paid the $149.40 bill.
Then her March bill was $268.38 for her small two-bedroom apartment in Akron.
“How in the devil did it get to that?” Bell asked herself.
Her rate had skyrocketed to $17.36/mcf. That’s more than five times the March SCO price, effective March 15, of $2.93/mcf.
Bell, 77, admits she didn't look closely at her contract with PalmCo, which does business as Indra Energy.
“I don’t get hoodwinked easy,” she said. “When he said variable rate, I probably didn’t catch on to it when he said it and I went ahead and did it.”
It can be confusing. A variable rate does mean it varies from month to month. They are common in the mortgage industry and the natural gas industry.
In fact, the SCO, which I have been recommending for some time to my readers, is a monthly variable rate.
However, the big difference is that the variable SCO rate is based on a state-approved formula set during a competitive auction of marketers. Starting April 1, that formula has increased to the wholesale market price, or the New York Mercantile Exchange (NYMEX) price plus a 22 cent/mcf adder. That’s up 15 cents/mcf from last year’s adder of 7 cents/mcf and only translates to a $15 annual increase for the average residential user.
The problem with most variable rates offered by marketers is they are unregulated, and marketers typically do not share how they set their rates monthly.
Bell is not alone in her outrageously high and unregulated “variable” rate. I received at least three calls from readers complaining that their Indra bills skyrocketed to the $17.36/mcf rate. The Public Utilities Commission of Ohio (PUCO) has received similar complaints.
When they called Indra, they were also told it was the going market rate.
A representative told Bell her $17.36 rate was because it was cold.
Since last July, Bell got two months at the $2.50/mcf price, but then her “variable” rates jumped from $5.86/mcf in September to $10.87 in October and back down to the $8 and $9 range before the $7.98 and then the $17.36.
By comparison, the SCO since July has been a high of $4.79/mcf in December when there was a slight increase for one month to a low of $2.89/mcf in August. Mostly it was in the high $2/mcf range to low $3/mcf range.
Indra Energy did not return calls seeking comment or explanation for its rates.
Though Indra’s variable rates are exponentially high, there are others on the Public Utility Commission of Ohio’s Apples to Apples comparison chart at www.energychoice.ohio.gov that are high. They range from $2.60 to $9.25/mcf.
Indra is listed as the cheapest variable rate at $2.60/mcf, but when you click on the “offers,” it says it is a one-month rate, then goes to the variable, which is currently at $13.86/mcf.
Over the years, I have gotten other calls from readers who have signed up for contracts or offers and then lose track of what price they’re paying or whether their contract has ended. During a spot-check, they’ll notice that they are paying a much higher rate than the going market rates. But I’ve never heard about rates this high.
A common misunderstanding is they believe that a one-year contract ends. That is not true. The contracts usually automatically renew and usually at a different rate, so make sure you are watching for renewal letters or writing yourself notes in your calendars when your contracts are due.
For those of you on the SCO with me, it is not a contract, though it continues month to month unless you sign up for another provider or your community participates in a community aggregation, or group buying contract and you did not opt out of the aggregation.
PUCO spokesman Matt Schilling said the commission is investigating to make sure no rules have been broken by Indra, but it is possible the customers will have to pay the rates since they agreed to the terms.
Schilling said the PUCO encourages customers to shop around and ask suppliers questions. The PUCO has a list of questions to ask on its comparison chart site.
“The most important thing is to compare offers and understand the terms,” he said. The SCO is also designed to be as competitively priced as possible, he said.
Bell and the other readers who contacted me have filed complaints with the PUCO.
Bell said Indra has now offered her a $207 credit on her bill. She said she knows even if she accepts that credit, she’s overpaid for her gas.
The customer service representative also offered her a new contract for $7/mcf fixed.
But Bell wants to switch to the SCO.
“I said, ‘Do I look like a fool?' If I sign up again, then I’d be a damn fool.”
Betty Lin-Fisher can be reached at 330-996-3724 or firstname.lastname@example.org. Follow her @blinfisherABJ on Twitter or www.facebook.com/BettyLinFisherABJ and see all her stories at www.ohio.com/topics/linfisher