Don’t get burned by natural gas prices

COLUMBUS – The Ohio Consumers’ Counsel, the residential utility advocate, alerts consumers investigating or currently participating in a natural gas choice program to pay close attention to variable rate contract offers.

Do your homework.

The counsel encourages consumers to research all supplier offers prior to enrolling, especially those offering variable rate pricing.

A variable rate is the price consumers pay per cubic foot of gas that can fluctuate as natural gas market rates increase and decrease.

“We can’t emphasize enough the importance of education. Consumers need to read all the information they can get their hands on before making a decision about a natural gas supplier,” said Robert S. Tongren, of the Ohio Consumers Counsel.

Prices fluctuate.

“We understand people are struggling with the high costs of gas. It’s important for consumers to know that variable rates increase and decrease, depending on the market.”

Currently, many natural gas suppliers do not provide consumers with the formula they use to determine how a rate will fluctuate. Under Ohio law, rates that are not fixed are required to be reasonable and set in good faith.

Unfortunately, a violation of these standards is often hard to monitor and difficult to prove.

Because there is no standard formula, consumers need to look for terms in the contract that safeguard them from paying unreasonable prices.

What to look for.

A few key provisions to look for are:

* Does the supplier have a cap or maximum amount you could pay attached to its variable rate offer?

* If there is no capped rate, do you have the ability to terminate the contract?

* And if a provision permitting you to terminate your contract exists, what if any penalty fees apply?

“Consumers need to make a decision based on what is best for them. Individuals who want additional information about energy assistance programs and energy efficiency should contact the counsel,” Tongren said.

Learning the hard way.

Approximately 8,000 residential customers in the Columbia Gas Choice program are learning the hidden dangers of uncapped variable rate plans.

Stand Energy Corporation, a natural gas supplier, mailed a letter to each of its variable rate customers dated Jan. 8 explaining that it could no longer offer a rate lower than that offered by Columbia Gas of Ohio.

Stand’s variable rate for January rose to $1.63 per hundred cubic feet (ccf), more than twice the amount of Columbia Gas’ then GCR of 74 cents per cubic feet.

Stand’s February variable rate of $1.26 per hundred cubic feet remains high in comparison to Columbia Gas’ February rate of 86 cents per hundred cubic feet.

Early termination.

Stand is giving customers the opportunity to voluntarily terminate their contract and return to Columbia Gas or choose another natural gas supplier.

Customers of Stand Energy who wish to cancel their service contract need to mail a letter stating their wishes to Stand Energy Corporation, 1077 Celestial St. Rockwood Bldg. Suite 110, Cincinnati, OH 45202, email the company at sdover@stand-energy.com or fax their request to 513-621-3773.

Learn more.

Consumers who have questions about variable rate offers or would like information about the natural gas choice program should contact the Ohio Consumers’ Counsel toll free at 1-877-PICKOCC (1-877-742-5622) for assistance.

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