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Business & Economy

Many consumers who picked their own gas supplier pay more, one company's customers paid $2 billion more since deregulation

A utility meter at a restaurant in Long Beach, California.
Doris Morgan
/
Unsplash
A utility meter at a restaurant in Long Beach, California.

This is part three of a three-part series exploring natural gas utilities in Ohio. The first part looked at Columbia Gas' request for over $200 million in additional revenue. The second part explored scandals at the Public Utilities Commission of Ohio.

It’s been a quarter of a century since Ohio separated the sale of natural gas from the charge to deliver it. That opened the door for suppliers to sell the fossil fuel directly to customers using a distributor’s infrastructure.

While the consensus is that deregulation led to a more competitive market for energy costs in the state, data shows users who opted to buy from a supplier ended up paying $2 billion more than other customers.

Often, those suppliers send salespeople to knock on doors and try to convince people to take them on as a supplier. With certain rules in place, the tactic is allowed under the state’s Energy Choice program, as detailed in a video from the Public Utilities Commission of Ohio:

“Just like you shop for other products and services, you can also shop for an energy supplier. That's called energy choice, the ability to choose a company that supplies a generation of your electricity or natural gas,” said Mike Haugh with the Ohio Consumers’ Counsel.

Opening up Ohio’s natural gas market to an auction created savings in overall pricing because of the added competition, he said.

“Most of these gas utilities didn't own the fields where the gas was located. So they didn't really gain anything by selling consumers gas, because they couldn't make a profit off that. So Dominion went out and brought up the idea of ‘let's auction this off and just have people that own that supply, have them deliver it to us.’ And that's brought some, a lot of savings to consumers,” Haugh said.

People who decide to sign up with a company that knocks on the door, will pay their rates for gas under specific terms and gas will continue to come in the same way with a bill from Columbia Gas, Dominion Energy, Duke or Centerpoint Energy. Those bills will show the charge for the gas supplier separately.

But, people who make a snap decision without doing research may end up paying more in the long run. Haugh said that’s what the evidence over the last two decades shows for customers at Columbia Gas.

“The (Columbia Gas) customers that have shopped paid $2 billion more than those that have just been on the sort of the default rate if you don't, if you do, don't decide to choose,” Haugh said.

The company gathers that information and shared it with the OCC, but not all natural gas distributors do.

According to a Public Utilities Commission of Ohio dashboard, about 57% of natural gas customers in the state are using the choice program. But, industrial and commercial customers use the program more frequently than residential customers. Dominion has the highest percentage of customers enrolled, with 80% enrolled. About 47% of Columbia Gas’s customers are selecting their own suppliers, and about 40% each of Duke’s and Centerpoint’s customers.

Before selecting any supplier, be sure to read the fine print, Haugh said. There could be early termination fees and other variations that aren’t clear in the initial sell. Plus, there are other risks.

“There's been dozens of cases at the commission with these energy marketers, there's three of them right now I believe that of going door to door marketing and being misleading with their products or selling consumers, there's another where they start doing at a low rate in three months, suddenly your rates tripled,” Haugh said.

Haugh said most customers will be best off with the standard option offered through their distributors.

“How much time do you want to spend on this? Because it's not going to be worth the maybe $10, $20 you save a year on this. It’s not going to be worth the time that you have to be involved, because a lot of these have contracts that will rollover after six months a year,” he said.

Haugh said consumers should avoid making a decision because of a knock on the door, and to first study the companies, their rates and the terms of their contracts. You can also follow the Ohio Consumers' Counsel guide.

“I mean, would you sign up for a cell phone provider at the door,” Haugh said. “It's the same type of idea that and you need to have time to look over the contracts to look at what else is out there. Because suddenly, when a guy's knocking on your door, you don't have a basis of comparison.”

This August, there are over 60 companies from several states with offers through Columbia Gas, the state’s largest natural gas distributor. On the state’s energy choice website, consumers can compare them all, see if the rates are fixed or variable, look at other offers and read the terms and conditions.

This is part three of a three-part series exploring natural gas utilities in Ohio. The first part looked at Columbia Gas' request for over $200 million in additional revenue. The second part explored scandals at the Public Utilities Commission of Ohio.

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Business & Economy Columbia GasUtilities
Renee Fox is a reporter for 89.7 NPR News. Fox joined the WOSU newsroom from the Tribune Chronicle/Vindicator in the Youngstown area, where she’d been a reporter since 2014. Contact Renee at renee.fox@wosu.org.