Office of the Ohio Consumers' Counsel

Gas Choice 101



What Is Natural Gas Choice?

A. If you are a customer of Duke Energy, Columbia Gas, Dominion East Ohio or Vectren Energy Delivery, you may have the opportunity to save on energy costs through one of Ohio's natural gas choice programs. Natural gas choice allows you to comparison shop for natural gas just like you would for other goods and services. Even if you choose another natural gas supplier, your local utility still owns the pipes and other equipment that transports gas to your home. No additional pipes or meters will be needed if you decide to switch. If you experience any service- related problems or an emergency situation, you will still contact your local utility.

The Ohio Consumers' Counsel (OCC), the residential utility advocate, has played a major role in the implementation and monitoring of Ohio's choice programs to ensure that residential consumers have the information they need to make an educated decision and that their rights are protected.

This booklet was designed as a guide to participating in natural gas choice. Ultimately the choice is yours, and you should choose a supplier that best meets the needs of you and your family.
 

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Choices Available to You

Q. What Are My Options?

You may stay with your local utility. No residential consumer can be forced to choose a natural gas supplier. If you choose not to participate in a natural gas choice program, your local utility will continue to supply you with natural gas. The price you pay for natural gas will continue to be regulated by the Public Utilities Commission of Ohio (PUCO).

You may choose to purchase natural gas from a certified natural gas supplier other than your local utility company. By electing to choose a natural gas supplier, you may have the ability to reduce the price you pay for natural gas. This can impact your bill since the cost of natural gas is about 65 percent of your total monthly charges. You will continue to pay your local utility for the delivery of natural gas to your home.

Your community may become part of an aggregated group. Ohio law allows local governments such as cities, townships and counties to pool residents and businesses together as a buying group for the purchase of natural gas. The aggregator will enter into an agreement with a certified natural gas supplier on behalf of all members of the aggregated group. Aggregated groups may possess greater bargaining power than individual consumers, which may result in greater savings or other benefits.

Affinity aggregation makes group buying power available to associations and other organizations such as churches, schools and membership-based groups. A supplier will make an offer available only to members of that group.
 

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Requirements to participate

Q: Is everyone able to participate in a choice program?

A. No. Consumers interested in participating in a natural gas choice program must meet the following requirements:

  1. A customer's account with the natural gas utility must be current, meaning there are no existing balances due from previous months, or a customer must have entered into a plan with the natural gas utility to pay off any balances due; and

  2. Consumers cannot currently be enrolled in the Percentage of Income Payment Plan (PIPP) to individually select a new natural gas supplier.



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Suppliers and Their Offers

Q. How do I know which suppliers I can choose from?

A. The OCC offers a weekly updated list of certified suppliers currently enrolling new residential customers for each utility's service area. In addition to the company information, the list also includes the supplier's rate, offer description and the length of the agreement. A worksheet also is provided so that you may calculate the difference, if any, between what you pay your local utility company and what you would pay a particular supplier.

Q. What types of offers are out there?

A. There are several different types of offers. When you are reviewing the various supplier offers on the "Comparing Your Energy Choices" fact sheet you may see some or all of the following types of offers:

Fixed Rate - This price per unit of gas is guaranteed not to change for the length of your agreement. Typically, agreement periods range anywhere from six months to three years.

Variable Rate - This type of agreement offers a price per unit of gas that can change based on various conditions. Consumers considering entering into a variable rate agreement should ask the supplier how often the rate is subject to change and what factors will cause the rate to change.

Percentage off the Gas Cost Recovery (GCR) - This agreement offers a discount off the natural gas company's regulated rate. The Gas Cost Recovery (GCR) charge makes up the largest portion of your monthly natural gas bill. The GCR includes the natural gas company's estimated cost of the gas and adjustments to "true up" previous estimates with the actual cost of gas. The GCR rate changes on a quarterly basis, so a percentage off the GCR offer also will fluctuate on a quarterly basis.

Percentage off the Estimated Gas Cost (EGC) - This agreement offers a discount off the natural gas company's Estimated Gas Cost (EGC). The EGC is the natural gas company's estimate of what gas will cost for the next quarter. Typically, the EGC is the largest component of the Gas Cost Recovery (GCR) rate. Like the GCR rate, the EGC also changes quarterly.

Hybrid Programs - These offers often have different rates associated with seasonal changes. Most offers charge one rate for the winter months (November . April) and another rate during the summer months (May-October). Other hybrid offers may have a variable rate for a period of time and a fixed rate for the remainder of the agreement.

Incentive Offers - In addition to a rate per McF or Ccf (units of natural gas), some supplier offers may include additional incentives or discounts. You may see a fixed or variable rate offer that includes a certain month of the year for free, or offers a rebate at the end of the agreement period. Other offers may include gift certificates or promotional coupons. The added incentives can be factored into your estimate of what, if any, money you would save by choosing a certain supplier.

This list is not all-inclusive, but it should provide you with a better understanding about available options.

Q. What rate will I pay if I choose to stay with my local natural gas utility company?

A. Under state law, natural gas utilities may only charge residential customers for the actual cost of gas, which is billed as the Gas Cost Recovery or GCR rate. The GCR makes up approximately two- thirds of your monthly natural gas bill. The GCR rate is adjusted on a quarterly basis based on the utility's estimate of what natural gas will cost for the following three months.

If you select a natural gas supplier from the choice program, you will no longer see the GCR rate on your monthly utility bill. Instead, you will see your new supplier's charges.
 

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Making a Decision

Q. Are there any questions I should ask a supplier before making a decision?

A. Yes. The following list will assist you as you shop for a natural gas supplier:

  • Is there a fee to sign up?

  • Is there a fee to switch if I decide to go back to my local utility company or decide to switch to another natural gas supplier?

  • How long is the agreement?

  • How much will I pay (the rate) for natural gas?

  • Is the offer a flat rate for a certain quantity of gas or will the price fluctuate?

  • Is there a fee to cancel my agreement?

  • At the end of my agreement, will it automatically renew?

  • Will I receive two bills, one from the supplier and one from my utility company, or just one bill?

  • If I have a billing problem, whom should I contact?

  • What are the terms and conditions of the agreement? (Always obtain, and keep, a copy of the agreement.)

  • What happens if I decide to move before the agreement expires?

  • When will my service from the natural gas supplier begin?

  • When will the supplier's charges for natural gas appear on my bill?
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Enrollment

Q. Once I've selected a supplier, how do I enroll?

A. You may be able to enroll by telephone, mail, fax, Internet or with a door-to-door salesperson. Whichever method is used, it is critical that you obtain a copy of your agreement and keep it through the duration of your service agreement.

Once you've enrolled with a supplier, the supplier will notify your local natural gas utility of the switch. Your local utility will then mail you a letter confirming your choice to switch, the supplier chosen and the date the switch will become effective. Once you receive that letter, you have seven business days from the postmarked date to cancel your agreement without penalty. To cancel the agreement you must contact your natural gas utility company.

Q. How long will it take from the time I enroll with a supplier until I see it reflected on my monthly natural gas bill?

A. The actual switch to a supplier depends on your meter read date. Your meter read date can be found on your monthly bill and indicates the next time your meter will be read and a new billing cycle will begin. Generally, switches occur within one to two months.

It's important to know that no matter when the actual switch occurs, you will not see an interruption in your natural gas service.

Q. What happens when my agreement with a natural gas supplier ends?

A. Information about the end of your agreement is included in the terms and conditions of that agreement. You will need to review the copy of your agreement and look for information about renewal. If your agreement does not have a renewal provision, you will be returned to your local utility company at the end of the agreement period.

Automatic renewals are common in supplier agreements. If your contract has an automatic renewal provision it is important to understand the renewal and notification requirements:

  • If your agreement will renew for less than six months, then the supplier is not required to send you any notification.

  • If the renewal contains no material changes from your original agreement and is for a period of six months or longer, the supplier is required to send you a notice of your agreement's expiration by mail at least 45 days before your original agreement ends.

  • If the renewal includes material changes, such as an increase in a fixed rate, a change from a fixed to a variable rate or any new fees, the type of renewal notice you will receive depends on the type of cancellation provisions in your new agreement. If your new agreement will contain an early cancellation fee for more than $25, the supplier must send you a renewal notice explaining the changes at least 45 days before your original agreement ends. You must respond affirmatively to the supplier that you wish to renew under the new agreement. If you do not respond, you will be returned to your natural gas utility's GCR rate for gas.

  • If your new agreement contains material changes and will have an early cancellation fee of $25 or less, you will receive two renewal notices explaining the changes from your supplier at least 45 days before your original agreement ends. To not renew under the new agreement, you must contact your supplier and cancel the agreement. In this instance, if you do not respond you will stay with your supplier under the new rate, terms and conditions.

Q. Can I go back to my local utility or switch to another natural gas supplier before the end of my agreement period?

A. Yes. You can return to your local utility or switch to another supplier at any time, but there may be penalties for doing so. Depending on the supplier, you may be charged significant cancellation fees to end your agreement early.

*If your agreement is a contract, you may be responsible for damages for breaking that contract. Read your agreement carefully.

To return to your local utility you should call the utility directly. If you move directly from one supplier to another, the actual switch will not take place until the next billing cycle. At no time during the switch should you experience a disruption in your natural gas service.

Q. What happens if my supplier leaves the gas choice program or merges with another supplier before the agreement period is over?

A. In the past, there have been situations where a supplier has been unable to meet its obligations or has completely withdrawn from the gas choice program. In an instance like this, you would be returned automatically to your local utility company at its current Gas Cost Recovery (GCR) rate. If you encounter a situation where you are returned to your local utility company before the end of the agreement period without your consent, it is important that you contact the OCC to inquire about any options that may be available.

Q. If I sign up with a natural gas supplier and my local utility's Gas Cost Recovery (GCR) rate falls below the rate I am paying, can I go back to my local utility?

A. Yes. You can always return to the local utility by calling the utility directly, however, depending on the supplier and the agreement, there may be significant cancellation fees or other costs. You should try calling your supplier first to see if the company is willing to lower your rate. The supplier is under no legal obligation to lower its rate, but some companies may be willing to work with you. Remember, the GCR rate changes on a quarterly basis and there is no way of knowing the next quarter's rate. Before you make any decisions, you should take into consideration any fees you would be required to pay to get out of an agreement early and whether you think the rate you signed up for will produce savings over the course of the agreement period. Regardless of the choice you make, the Ohio Consumers' Counsel (OCC), your residential utility advocate, offers a variety of utility information to meet your changing needs. We are available to help answer your questions and provide up-to-date information so you can ask the right questions and make a smart choice for your household.

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The Ohio Consumers' Counsel is the residential utility advocate serving as a resource for individuals who have questions and concerns or would like more information about the services provided by their investor owned electric, natural gas, telephone and water companies. The state agency also educates consumers about utility issues and resolves complaints from individuals.

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