As energy prices rise as winter approaches, some customers are starting to shop around for new natural gas suppliers, which may have cheaper rates than utilities.
While energy suppliers sometimes offer more competitive rates, utility experts say customers should do their homework and make sure they know exactly what they’re signing up for in the terms of their contract before switching.
“Understand what you are buying. Read the fine print. Understand the (financial) impact that shopping will have,” said Nils Hagen-Frederiksen, a spokesman for the state Public Service Commission.
When looking at a natural gas utility bill, there are two sets of rates that affect monthly costs: delivery and distribution. The distribution rate is usually flat and cannot be switched, but the supply side can fluctuate depending on the time of year and the demand for natural gas.
That happened in October, when Columbia Gas’ delivery charge more than doubled from 0.32613 per thermal to 0.74566, and utility companies in eastern Pennsylvania had even higher rates. That rate will remain unchanged in the final quarter of this year and will be adjusted again in January, but it could drop as fast as the shipping rate offered by dozens of companies that consumers can choose from.
Hagen-Frederiksen directed people to www.pagasswitch.com, which offers customers information and rate comparisons. There are many options from more than 60 companies that offer different terms at different costs with variable or fixed rates for different contract terms.
“You’re not changing your utility or your bill. You’re changing the company that delivers the natural gas you use,” Hagen-Frederiksen said. “These are competitive prices. But read the fine print, understand the terms, read your bill and check your historical data.
Every utility bill includes a “comparable price” figure that shows consumers how much they are paying for delivery costs. Because utilities update this number quarterly and “settle” purchases over several months, the ups and downs are not as pronounced as variable rate suppliers.
“The wholesale market can be volatile and has been since the war in Ukraine, inflation and colder months,” said Terry Fitzpatrick, president of the Pennsylvania Energy Association, which represents utilities.
He said utility companies usually get better prices in the long run through the buying process, but acknowledged that savvy consumers can also have deals. Fitzpatrick, who was previously a PUC commissioner, said that if people decide to sign a contract with a supplier, they should pay attention to the details of the contract and know when the deadline is coming up. Otherwise, they can be automatically renewed at a variable monthly rate if the consumer does not make a new choice at the end of the contract.
“Be diligent if you do this. Don’t go on autopilot,” Fitzpatrick said. “Do you want to be proactive in comparing prices and making sure you’re making the best choice for you when the contract ends?”
Power shopping is nothing new in Pennsylvania since deregulation a quarter of a century ago. Customers could start shopping for electricity tariffs from suppliers in late 1996, and the natural gas supply market opened three years later. However, since prices are higher now, it becomes more attractive to consumers.
One of those suppliers, York-based Shipley Energy, said it has seen an increase in new customers since October when higher rates went into effect at many utilities across Pennsylvania. The current fixed rate of 0.689 per thermal is lower than the Columbia rate, but has a 12-month contract, meaning it could end up being higher than the utility rate if it goes down over the next year.
Laura Greenholt, Shipley’s vice president of marketing, noted that their lower rate will save consumers money during the coldest months of the year, December through March, when people use the most natural gas.
“We have a much better supply situation here, which is helping prices come down,” Greenholt said. “It’s pretty low-effort homework. There is a PUC shopping site with lots of information on suppliers and they can compare options.
Customers who sign up won’t notice any changes, except for the “supply” company name on their bill, which still comes from the utility company. The sign-up process is simple and can be done online or over the phone if the customer has their account information. Some suppliers even offer perks, she said, including the Shipley Rewards program, which offers 3% cash back on purchases.
“It’s pretty invisible. They don’t have to change equipment,” Greenholt said. “They just have to go online and sign up … and provide their account number.”
When someone’s contract with a supplier ends, they can shop again, or they’ll be automatically signed up to the supplier’s variable rate, which will apply every month. Another option is to tell your utility company that you plan to switch back to a rate that is purchased on the wholesale market and may be competitive over time.
“If you choose the default price (the price from the utility), they’re effectively shopping on your behalf,” Hagen-Frederiksen said.
Hagen-Frederiksen likened the deregulated market to buying Pepsi or Coca-Cola at the grocery store. Some customers may buy one brand per visit regardless of price, while others decide to buy the cheapest option on a given date.
“Most people don’t think about it. … Much like electricity, consumers are not forced to buy (natural gas),” he said. “If you want to buy, that’s a personal decision.”
