In the past month we (my neighborhood in San Francisco) have had two different companies come by door to door and try to sell us some kind of natural gas contract, with some kind of guaranteed price for 3 years or so, that would or could be different from the price we would get from our local utility (PG&E, Pacific Gas & Electric). The charges would appear on the PG&E bill but they would flow through directly to the producer (as I understand it).
What is going on here? I’ve never seen this before - is this the result of some change in state regulations? Both companies (one called Commerce Energy and one called SFE Energy) seem to have operations in several states besides California.
What was also odd was that their door-to-door sales pitch was virtually identical, right down to the scripted insistence on seeing my utility bill “so we can see if you are getting the lowest rate for natural gas.” Needless to say, I gave them short shrift and told them to get lost. But I remain very curious about what is going on.
We have had unbundled gas and electric supply in Illinois for some time now.
Before I get to any details: Do not under any circumstances show these people you gas or electric bills. The only reason they ask is to copy your account number off the bill and then submit an unauthorized change order to your utility company under your name.
As a matter of fact, do not open your door for these people. If you really want to change your gas or electric supplier, there are sites on the internet where you can calmly and deliberately compare your options among hundreds of suppliers without anybody breathing down your neck showing you just one option.
These sales people have become a total nuisance. They will imply (and some will outright lie) that they work for the utility company and need to check your bill or even check your meter. They may even tell you that your utility service will be cut off if you don’t cooperate. Most of them are kids working strictly on commission with all the zeal of Amway salesmen or Christian missionaries and will do anything to make the sale and don’t understand why anybody wouldn’t want to be tricked into buying from them.
Again, don’t let them in the door. Just don’t. Shop on the internet, if you must.
I’ve never investigated how the gas distribution network work, but I have looked into the electric supply network. I assume that the two are somewhat similar.
Vastly simplified, all the electric generation plants and all of the utility companies in an area are hooked into a grid. The grid is sort of a pipe (figuratively). Anyone who owns an electric generation plant or operates an electric utility can hook into the grid (provided they meet certain technical and regulatory standards). The generation plants pump electrons into the pipe, the utilities pump electrons out of the pipe and deliver them to your house. Every time you flip a light switch in your house, the electrons pour out the pipe and into your light bulb. But someone needs to replace the electrons that came out of the pipe. This is where the electric suppliers come into play. Instead of making you replace those electrons yourself, they do it for you. Some of them own electric generation plants, some of them contract with plant owners to get the electricity. They also take the risk of buying electricity on the spot market and paying spot prices on days when their contracted suppliers cannot meet the demand.
So what these companies are doing is replacing the electricity that their customers are using. They are paying to have electricity pumped into the pipe that your utility (PG&E) is pumping it out of. And they are betting that they can negotiate better deals for electric supply than PG&E can and still make a profit.
I assume the gas system is similar.
Now in order to make a profit, it is common for these alternate suppliers to throw some of the risk onto their consumers. For example, last year about this time, I got a lot of offers to sign up for gas supply at “just” 85 cents a therm, accompanied by warning that gas prices could sky rocket this winter and that I should “lock in” this wonderful price for two years. As it turns out, this winter gas prices were in the 20 to 30 cent range. I would have been screwed if I had taken them up on this offer. On the other hand, if gas prices had jumped to over $1 like they did several winters ago, I would have come out ahead.
One of our consumer advocacy groups did a study of alternative gas supply contracts. I think they found that something like 85% of the offers in Illinois would have ended up costing consumers more money over the course of the contract period. This doesn’t necessarily mean that the offers you have received are bad, it just means you should approach them carefully.
The electric suppliers also make some dubious claims of providing “green energy.” Often they just buy RECs (Renewable Energy Certificates) and charge you several times what you could have bought them yourself for or they engage in creative accounting where no net increase in “green energy” is produced, they just allocate all the “green energy” to the customers who pay the premium price and then allocate all the “brown energy” (and left over green energy) to the customers who didn’t.
Unless I’m expecting someone, I never answer the door. It seldom happens ((last of three properties on a gravel private lane) but even before living here I’ve never answered.
If I want a pizza delivered, I’ll call and be waiting. But unsolicited knockers are either Witnesses or salespeople. No thanks.
We’ve had this for several years. A very good idea.
We always pick the same company that is also our electric utility (which is a co-op). Convenient to have one bill a month, etc.
Since it’s a co-op, they almost always have the lowest gas prices. Except this year. But I made a phone call and got a matching price.
To get the best price we do have to lock-in. Options include 6mo, 1yr, 2yr. Since the lock-in price varies during the year and is usually lowest around June, we lock-in at that time for one year.
We don’t have to lock-in, we can get a variable rate plan. It’s low in the summer and high in the winter, of course.
The old gas company takes care of all service issues since it’s their pipes. Some of our bill gets passed onto them to cover all that sort of stuff. They advertise a lot on TV, radio and via junk mail. They also have the highest prices.