Sunday DECEMBER 21, 2008 Last modified: Thursday, December 18, 2008 11:58 AM CST


Deregulation has created bounty of choice for consumers

By MICHAEL FARRELL
Herald Writer


With deregulation, Nicor customers can choose among at least 12 different companies from whom to buy their natural gas.

Carmen Morales, senior community relations director for Nicor, told the Grundy County Chamber of Commerce luncheon Wednesday that “it is buyer beware.”

Morales explained Nicor delivers the gas to each residence or business and charges a fee, which accounts for 15 to 20 percent of each month's bill.

Nicor is seeking an increase in the delivery charge with the Illinois Commerce Commission. If approved in the spring of 2009, the average residential customer would see an increase of about $4.60 per month.

The cost of natural gas accounts for about 75 percent of the bill, with taxes taking the remainder.

Nicor cannot make any profit off the sale of natural gas, Morales said. Since deregulation, many people continue to use Nicor as the default supplier of natural gas.

But with deregulation, natural gas companies are soliciting people by telephone and by mail.

“I got a call from a company offering a rate of $1.12 per therm,” she said. Since the December price of natural gas is about 65 cents per therm, anyone taking that offer would be paying twice as much for gas as they would have to.”

“There are almost too many gas suppliers, too many options,” she said.

Morales said anyone talking with a gas supplier should ask several questions - Does the company require a contract, for how long is the contract and how much does it cost to get out of the contract?

Morales said companies have substantial charges if someone wants to get out of a contract.

Find out what the company is charging for the natural gas, whether that price can change, and whether there are any other service charges, Morales encouraged. Also, find out if the company have an 800 number in case there is a question and if the company sends a separate bill or if it will it be part of the Nicor bill.

Morales said the price of natural gas has been volatile, although it is currently 65 cents per therm, which is what it was last December. (A therm is the energy equivalent of burning 100 cubic feet of gas, 29.3 kilowatt hours of electricity or 100,000 BTUs.)

During the summer, due in part to the rapid increase in oil prices, natural gas was $1.45 per therm in July.

“We had never seen that before,” she said, as prices are normally higher in the winter, when there is more demand for natural gas.

The cost of gas per therm changes every month and it is shown on the monthly bill. Depending on each customer's billing cycle, some people pay a combination of the cost of gas from two months.

Morales said Nicor has an advantage over most other companies because it can store natural gas in the ground. This allows the company to buy natural gas when prices drop and store it until it is needed.

She explained the gas is stored in porous rock formations and water acts as a cap.

Nicor offers a budget plan, so an individual's monthly gas bill is about the same throughout the year. Budgets plans are adjusted every four months, as the price of natural gas changes, so it is important for customers to still check the amount due on each bill.

Anyone who overpays does receive interest from Nicor, but it is in the form of a credit, she said.

Ambit Energy is a natural gas retailer that can supply gas to Nicor customers. A representative of the company, which obtains its gas from Shell Oil, said it guarantees each customer's bill will be lower with Ambit than it would be with Nicor.

Ambit does not require a contract, there is no charge to switch to or from Ambit, and there are no service charges.



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