With energy prices rising and winter approaching, some customers are starting to shop for new natural gas suppliers that may have cheaper rates than the 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 they’re signing up for in terms of the contract.
“Understand what you are shopping for. Read the fine print. Understand the (financial) impact of shopping,” said Nils Hagen-Frederiksen, a spokesman for the state’s Public 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 usually fixed and cannot be changed, but the supply side can fluctuate depending on the time of year and the demand for natural gas.
That happened in October, when the supply charge for Columbia Gas doubled from .32613 per thermal to .74566, and utility companies in eastern Pennsylvania had even higher rate increases. That rate will remain the same in the last quarter of this year and will be adjusted again in January, but it may not fall as quickly as the supply 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 at different contract lengths.
“You’re not switching your utility or your bill. You are transferring the entity that gives you natural gas that you use,” said Hagen-Frederiksen. “Those are competitive prices. But read the fine print, understand the terms, read your bill and check historical figures.”
On every utility bill, there is a “price to compare” number that shows consumers what they are paying for supply costs. Since utility companies update that number quarterly and buy the “layer” over several months, the spikes and drops are not as clear as what providers may offer on variable rates.
“The wholesale market can be volatile, and it has been since the war in Ukraine, inflation and the coming colder months,” said Terry Fitzpatrick, president of the Pennsylvania Energy Association which represents utility companies.
He said utility companies usually get better prices in the long term with their purchasing process, but he acknowledged there could be deals for savvy consumers. Fitzpatrick, a former PUC commissioner, said if people decide to sign a contract with a provider, they should pay attention to the details of the contract and know when the term is coming to an end. Otherwise, they could be automatically renewed at a variable monthly rate unless the consumer makes a new choice at the end of the contract.
“Be diligent if you’re doing it. Don’t be on autopilot,” Fitzpatrick said. “Do you want to actively participate in comparing prices and making sure that when your contract ends you are making the best choice for you?”
Energy shopping in Pennsylvania is nothing new since deregulation a quarter century ago. Customers could start shopping for electricity rates from suppliers in late 1996, and the natural gas supply market opened three years later. But with higher prices now, it is becoming more attractive to consumers.
One of those providers, 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. Its current fixed rate at .689 per term is lower than Columbia’s price, but it comes with a 12-month contract, meaning it could end up being higher than the utility’s rate if that drops over the course of the year next.
Laura Greenholt, vice president of marketing for Shipley, noted that its lower rate will save consumers money during the coldest months of the year from December to March when people are using the most natural gas.
“We’re in a much better supply situation here which helps keep the prices down,” Greenholt said. “Doing your homework is very little effort. There is a PUC shopping website, which has a lot of provider information and they can compare options.”
Customers who sign up will not notice any changes except for the name of the “supply” company on their bill, which still comes from the utility company. The signup process is easy and can be done online or over the phone, provided the customer has his or her account information. Some suppliers even offer perks, she said, including Shipley’s rewards program that offers 3% back on purchases.
“It’s seamless. They don’t need to exchange any equipment,” Greenholt said. “All they have to do is go online and sign up … and provide their account number.”
When a person’s contract with a provider ends, they can shop again or they will be automatically enrolled in the provider’s variable rate from month to month. Another option is to notify your utility company that you intend to return to their rate, which is purchased on the wholesale market and can become competitive over time.
“If you choose the default (price from the utility) they effectively shop for you,” Hagen-Frederiksen said.
Hagen-Frederiksen compared the deregulated market to buying Pepsi or Coca-Cola in a grocery store. Some customers may buy one brand on each visit regardless of price while others decide which is cheaper to buy on that particular date.
“Most people don’t think about that. … Like electricity, consumers are not forced to shop (for natural gas),” he said. “If you want to shop, it’s a personal decision.”