Cleveland, Ohio – Your natural gas bill may increase this winter. Maybe up to 30%. Is there anything you can do about this?
It’s not all in the customer’s hands when it comes to purchasing natural gas, but there are some options you have to control your costs.
A gas bill has two parts: supply and transport. Customers can control who supplies their gas, but not who transports it.
Depending on where you live in Northeast Ohio, you are likely served by Dominion Energy or Columbia Gas. They charge fees to transport and distribute natural gas to homes and businesses. The transportation of this natural gas is normally a flat rate, said Matt Schilling, spokesperson for the Ohio Utilities Commission.
This part of the bill is beyond your control. But that’s not why the US Energy Information Administration is forecasting a 30% increase this winter. The prediction is mostly about demand growth faster than supply, but cold weather also plays a role.
Where Ohioans usually have a choice is with their gas supplier. They can choose who puts the gas in the pipeline and what it will cost. Schilling said during the winter that part of the gas bill could be 50 to 60% of the total cost.
In Northeast Ohio, you usually have three options. You can take the gas utility’s standard choice offer, shop on the open market, or use your community’s aggregation option if it has one. Many local municipalities use the Northeast Ohio Public Energy Council (NOPEC) as a consolidation option.
Open market options can be found at energychoice.ohio.gov, using the “apples to apples” comparison. Variable rates, which change from month to month, and fixed rates are available.
The standard choice offer
Customers who do not purchase or do not have an aggregation option will receive the Standard Choice Offer (SCO) from their gas service. This rate changes from month to month and is based on a state approved formula that is linked to the price of natural gas.
It has been relatively cheap in recent years as natural gas prices have hit record highs, according to Dave Jankowski, NOPEC’s director of marketing and communications. But that will change a lot as the price of natural gas increases.
Schilling said the Standard Choice offering is designed to be competitively priced, so even if customers don’t want to shop, they’ll get a similar price to what can be found on the open market.
He said that even though gasoline prices are rising, they are still half of what they were in 2010.
According to energychoice.ohio.gov, the standard choice offering increased 24% for Columbia Gas customers from September to October and 33% for Dominion Energy customers.
The free market
Most Ohio homeowners can buy their supplier on the open market. They can go to energychoice.ohio.gov and use the apples to apples comparison and choose a company based on their price and contract.
Variable rates, which change from month to month, and fixed rates are available.
Prices between companies will vary, as will the length of contracts and other conditions. Schilling said residents should read terms up close and be aware of what the contract says before you buy.
Sometimes the Public Utilities Board hears from residents whose contracts expire and are suddenly billed higher rates when their contract is automatically renewed. To exit the contract, they may then have to pay a high early termination fee.
In addition, the rates may appear lower due to a promotion and customers are then stuck with higher rates.
“We advise people to really read the terms on the conditions so that they don’t get stuck and get stung,” he said.
If homeowners live in a community that has an agreement with an energy supplier or aggregator, they can use it as their natural gas supplier. NOPEC is the community aggregator of many local communities and purchases both natural gas and electricity wholesale.
Jankowski said it was a bit like buying toilet paper from Costco instead of a local supermarket. It is supplied in bulk which can lower the price.
Schilling said most groupings are the default for residents living in those communities. If they want to use the Standard Choice Offer or buy on the open market, they must opt out at a specific time of year.
If residents use an option but wish to use their community aggregator instead, they must register during the appropriate window. Schilling said local governments must allow the ability to opt out of natural gas aggregation every two years without paying a fee.
Within NOPEC, there are three options. The default is the program price option, where customers get a rate that varies based on the wholesale market. Jankowski said this the price changes, but buying in bulk allows NOPEC to avoid price peaks and troughs.
There is also a monthly variable price linked to the SCO. Customers can opt for this and have a rate that is slightly lower than the SCO, but which can still increase in the same way as the SCO.
Homeowners can also accept a fixed 12 or 24 month rate which will not change.
If you live in a NOPEC community, you will be automatically assigned NOPEC Standard Program Price, unless you opt out.
NOPEC registers natural gas customers every two years and sends reminders to residents. They must return a form to opt out of NOPEC or they are automatically registered. Customers must call NOPEC to be put on the flat rate or the monthly variable price.
Jankowski said that NOPEC’s next registration period begins on November 10. Residents have until December 13 to opt out.
Schilling said that each community aggregator has registration periods at different times. Some aggregators have an early termination fee.
What to buy?
Jankowski said that the SCO and the NOPEC monthly variable price, have been cheaper for some time. But as prices rise, NOPEC markets the standard program price as the safest option when it comes to purchasing natural gas.
PUCO doesn’t try to guide residents in one way or another on what to buy, Schilling said. He said it’s important that it’s an individual’s choice, and different options are better for different people.
Schilling said PUCO has a budget option, so if a customer wants a more predictable monthly bill, they can call their supplier and have their gas consumption cost averaged over 12 months.
He said PUCO has a hotline, 1-800-686-7826, which helps answer residents’ questions and resolve disputes between customers and suppliers. People can also submit questions online on the PUCO website.
The apples-to-apples website also has questions customers can ask natural gas suppliers to learn more about their contracts.
There are also several assistance programs to help Ohioans struggling with energy bills, Schilling said. More information is available at puco.ohio.gov/wps/portal/gov/puco/utilities/electricity/resources/utility-assistance-programs.