With energy prices rising as winter approaches, some customers are starting to shop around for new natural gas providers who may have cheaper rates than utility companies.
While energy providers sometimes offer more competitive rates, utility experts say customers should do their homework before switching and make sure they know exactly what contract terms they’re signing into.
“Understand what you are shopping for. Read the fine print. Understand the (financial) impact the purchases will have,” said Nils Hagen-Frederiksen, spokesman for the State Utilities Commission.
When looking at your natural gas utility bill, there are two sets of rates that affect the monthly cost: supply and distribution. The distribution rate is generally stable and cannot be changed, but supply can fluctuate depending on the time of year and demand for natural gas.
This happened in October, when Columbia Gas’ supply charges more than doubled from 0.32613 per therm to 0.74566, and utility companies in eastern Pennsylvania experienced even higher price increases. This rate will remain the same in the last quarter of this year and will be adjusted again in January, but it may not drop as fast as the supply rate offered by dozens of companies that consumers can choose from.
Hagen-Frederiksen directed people to www.pagasswitch.com, which offers information and rate comparisons for customers. There are many options from over 60 companies that offer a variety of terms at different costs with variable or fixed rates at different contract lengths.
“You don’t change your utility or your bill. You change the entity that gives you the natural gas you use,” Hagen-Frederiksen said. “These are competitively priced. But read the fine print, understand the terms, read your bill and check the historical figures.
On every utility bill, there is a “price to compare” number telling consumers what they are paying for supply costs. Because utility companies update this figure quarterly and “spread” purchases over several months, the spikes and dips aren’t as steep as what providers may offer for variable rates.
“The wholesale market can be volatile, and has been since the war in Ukraine, inflation and the colder months ahead,” said Terry Fitzpatrick, president of the Energy Association of Pennsylvania, which represents utility companies. public.
He said utility companies typically get better long-term prices through their buying process, but acknowledged there may be deals for savvy consumers. Fitzpatrick, who previously served as PUC commissioner, said if people decide to sign a contract with a supplier, they need to pay attention to the details of the contract and know when the term is up. Otherwise, they could be renewed automatically at a variable monthly rate if the consumer does not make a new selection at the end of the contract.
“Be diligent if you do. Don’t be on autopilot,” Fitzpatrick said. “Do you want to actively participate in price comparison and ensure that at the end of your contract, you are making the best choice for you?”
Purchasing energy is nothing new in Pennsylvania since deregulation a quarter century ago. Customers were able to start purchasing electricity tariffs from suppliers in late 1996, and the natural gas supply market opened three years later. But with higher prices now, it becomes more attractive to consumers.
One such supplier, York-based Shipley Energy, said it has seen an increase in new customers since October, when higher rates took effect at many Pennsylvania utilities. Its current fixed rate at 0.689 per therm is lower than Columbia’s price, but it comes with a 12-month contract, which means it could potentially be higher than the utility rate if it drops over the course of next year.
Laura Greenholt, Shipley’s vice president of marketing, noted that their discounted rate will save consumers money during the colder months of the year, from December to March, when people use the most natural gas.
“We’re in a much better supply situation here, which is helping prices come down,” Greenholt said. “It’s a pretty low effort to do your homework. There is the PUC shopping website, which has a lot of information about vendors and they can compare options.
Customers who sign up won’t notice any changes except for the name of the “supply” company on their bill, which is still from the utility company. The registration process is simple and can be done online or over the phone, provided the customer has their account information. Some vendors even offer perks, she said, including Shipley’s rewards program that offers a 3% cashback on purchases.
“It’s pretty consistent. They don’t need to swap gear,” Greenholt said. “They just need to go online and register…and provide their account number.”
When a person’s contract with a provider ends, they can shop again or they will automatically be listed on the provider’s variable rate from month to month. Another option is to notify your utility company that you intend to revert to their rate, which is purchased in the wholesale market and may be competitive over time.
“If you choose the default price (utility price), they’re effectively buying on your behalf,” Hagen-Frederiksen said.
Hagen-Frederiksen compared the deregulated market to buying Pepsi or Coca-Cola at a grocery store. Some customers may buy a brand every visit, regardless of price, while others decide to buy the cheapest option on that particular date.
“Most people don’t think about that. … Just like electricity, consumers don’t have to shop (for natural gas),” he said. “Whether you want to go shopping is a personal decision.”
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