Government boards regulate the utility market price.  Although, the state utility regulator is required to pass market savings onto the consumer, local providers buy natural gas on the wholesale market and bill their customers’ retail. We put our clients in a wholesale position because brokers/marketers have the flexibility to buy gas when rates are lower and pass the savings onto their clients.

Comparing and deciding among the various offers.

In the new deregulated industry, buying natural gas is like getting a home loan. You can select between:

  • Contract terms of 1 to 5 years
  • Lock in at a fixed rate for an extended period of time
  • Choose variable rates and rely on an experienced gas manager to get you the lowest price

Why switch?

Most consumers switch to brokers/marketers to save money.  Together you can determine your comfort level.

Ø    Security – if the utility price makes you feel more secure, choose an option that offers a percentage less than the utility for guaranteed savings.

Ø    Lowest Price – if you want to have a knowledgeable gas company managing your gas supply, select the variable rate and let a gas supplier manage it for you.

Ø    Fixed Price – if you think prices are going to continue to rise and you want to be sure of your bills, choose a fixed price.

Regulated rates are not fixed rates.

Each province or state has an agency that regulates utility rates. Utilities can and do apply changes to rates.  They are not allowed to offer fixed contracts. By signing up with an energy marketer you can avoid these unexpected rate changes. We competitively tender your natural gas needs to deregulated natural gas marketers.

If you choose to buy from a gas broker/ marketer, your gas service won’t change.

You will continue to receive a bill from your distributing utility authority indicating their regulated delivery charge (about half of your bill) and a gas supply charge that goes to the gas supplier. If you also have rental equipment or a service contract, these will appear on your bill, as usual.

It’s important to remember these cost splits when comparing prices. The suppliers, brokers and/or marketers are offering rates on only half of your bill. As previously stated, the distribution charge and monthly service charge is fixed.  It is strictly regulated by an Energy Board or Public Service Commission. As a result, when a promotional message claims a 10% saving, it is ONLY referring to that 10% controlled by all energy brokers.

You do the math.

To qualify in the deregulated market, your company must spend a minimum of $5,000.00/ month ($60,000.00/year) on natural gas. Half of that monthly fee ($2,500.00) is a regulated transportation and delivery charge. The remainder is the gas supply charge.

A gas marketer offering a 10% savings is offering a savings of $250.00/ month, 10% of the $2,500.00 gas supply charge. Your annual savings would be $3,000.00.

Saving is parity to how much you spend. The above example applies only to minimum qualifications.  The more you use, the more you save.

Hutchinson Business Solutions (HBS) is an independent energy management consultant. We have been providing deregulated energy solutions to our clients for over 10 years. HBS clients are saving from 10% to 20% on their natural gas supply bills.

Large market swings offer you big savings.

If you have been following market prices for natural gas, over the past couple of years, you have probably noticed the large market swings. ie: In 2008, PSEG prices ranged from $1.07 per therm in February to $1.64 per therm in July. In 2009, prices dropped and we saw $.889 cents per therm in January with a low of $.496 cents a therm in September.  With so much market fluctuation, we have been advising our clients to float their accounts, based on the market index.  In this way, our clients can save anywhere between, 8% up to 20%, depending on whom their local provider is.

Choosing to float the market index does not preclude you “locking in” on a fixed price at any time during the term of the contract. Conversely, if you choose a fixed price, you are unable to change to a float when market prices go down.

Want to learn more about opportunities to save in the deregulated natural gas market email george@hbsadvantage.com or call 856-857-1230.

Visit us on the web www.hutchinsonbusinesssolutions.com

Deregulated Gas Savings

March 14, 2010

As reported by Energysop

Deregulation of utilities means that the historical monopolies granted to a few large utilities providing electricity, telephone and natural gas are eliminated. These companies will just operate the distribution systems, the wires and the pipes. Competitors then enter the market with different pricing and service offerings. With the onset of deregulation in all of these industries, it is possible for consumers to realize significant savings by shopping around for these commodities.

 Utility deregulation is complicated since there is a fixed and very expensive distribution system already in place – pipelines, power and phone lines. It’s just too expensive, disruptive and environmentally harmful to construct parallel distribution systems. This is different from deregulation of airlines or financial services where no such fixed infrastructure existed. As a result, only the commodity, gas, electricity or telecom, is deregulated.

Natural Gas Deregulation

Historically, consumers received supply and delivery of natural gas from a single company who had the monopoly franchise for the region in which they lived. These companies bought gas on the wholesale market and sold it to consumers in their jurisdictions according to regulated rates set by the local regulatory agency, an energy board or public service commission.

 Natural gas is being deregulated in many jurisdictions. Examples are, Ontario, Alberta, Maryland, California, Georgia and Pennsylvania. This means that a householder or business can buy gas directly from a supplier at a competitive price — not just from the gas utility. These utilities, however, continue to have the franchise to distribute gas and charge a regulated fee.

Deregulation separates the sale of the gas as a commodity from it’s distribution. The product is available at a competitive price and under competitive conditions but the delivery is a standard regulated charge. This would be similar to a situation where you might buy milk by phone, and it is delivered by a large courier service such as Federal Express. The milk is a commodity, and it would be priced differently between suppliers, but the supplier relies on a distribution system provided by Federal Express trucks. A portion of what you pay would be for the commodity (milk), and a portion for the distribution (Fed Ex). In the case of utilities, the distribution will remain regulated, but the commodity supply will be a free market.

 Experience in Other Jurisdictions

The U.S. initiated deregulation in the gas industry at the wholesale level in the mid 1980s which resulted in gas prices declining about 35 per cent for large commercial and industrial customers, according to a Harvard University study. Prices for residential consumers changed only slightly.

Agents, Brokers and Marketers (ABMs)

Consumers choosing to shop around for their natural gas supplies can benefit from the price swings and variations inherent in a competitive energy marketplace. But where do consumers go to buy natural gas? Deregulation has given rise to a number of sources of gas supply.

 First, you can continue to let your distributing utility purchase gas on your behalf and deliver it to you with no change in the process.

 Or you can look into purchasing it from an agent, broker or marketer. These are independent companies that either sell on behalf of gas producers or purchase supplies of gas and re-sell it to consumers. Securing a long term supply from one of these energy marketers when the gas prices are lower can result in significant savings over the term of your contract.

 Should you choose to buy from a gas marketer, nothing about your service will change. You will still get a bill from your distributing utility which will indicate a regulated Delivery Charge. This is about 1/3 of your bill and a Gas Supply Charge which is the remaining 2/3. The delivery charge will be kept by your distributing utility and the gas supply charge will be forwarded to the gas marketer or supplier you chose. Should you choose some value-added services offered by gas brokers, such as energy cost comparisons, rental gas equipment or an equipment service contract, these will also be added to your bill. If you switch to a gas marketer, there is no interruption of service nor any other additional fee charged.

 This cost split is a key point to remember when you are comparing costs or considering an appeal from one of the gas suppliers or marketers. You have no doubt received promotional materials from one of these either by phone, by mail or from someone knocking on your door. The suppliers, brokers and marketers are only dealing with 2/3 of your bill. The distribution charge, which is 1/3 of your bill, is fixed and regulated by regulatory boards. They have periodic hearings to evaluate and set this rate. The remaining 2/3 is variable depending on which supplier you choose. As a result, when a promotional message claims a 10% saving, it is referring to 10% of the 2/3.

 Take, as an example a fairly typical annual gas bill of $ 1,500. One third of that, $500, is a fixed distribution charge. The remainder, $1,000, is the gas supply charge. A supplier offering a 10% saving is offering a saving of $ 100, which is 10 % of the $ 1000 gas supply charge. The saving on the total energy bill is 6.7 %, ($100 saving on a $1,500 gas bill).

 Gas marketers offer varying contract terms and conditions. In general, however, you have two basic choices. You can sign on for a single or multi-year contract at a fixed price or you can choose a rebate option which means you pay the regulated price set by your distributing utility and will receive a rebate if your marketer can buy the supply for less than that price.

Our Perspective:

I found this article gave a good explanation of the deregulated natural gas opportunity. If your company is spending more than $3000 a month for natural gas, you should be looking at buying natural gas in the deregulated market. Our clients are saving a minimum of 10% to 15% by buying natural gas in the deregulated market.

Currently yor local provider is buying natural gas in the wholesale market and then selling it to their clients for retail prices. Should you qualify, we are able to put your company in a wholesale position and the savings will fall to your bottom line.

Hutchinson Business Solutions provides independent financial solutions in the dereglated energy market. We have been positioning our clients for savings in the deregulated energy market for over 10 years.

To find our more information, visit our website www.hutchinsonbusinesssolutions.com

or email george@hbsadvantage.com  You may also call 856-857-1230.

Deregulated Energy FAQ

February 1, 2010

Deregulated energy markets throughout the United States can mean substantial cost savings for businesses aware of the opportunities. Hutchinson Business Solutions makes benefiting from deregulation easy by answering your questions and showing you how our expertise in deregulated energy markets, coupled with our world-class list of energy providers, can help control costs, stabilize energy expenditures and increase profits for your company.

Q: Will the reliability of my electric or natural gas service change with deregulation?
A: No. Regardless of which energy provider we help you choose, your electricity and natural gas will continue to be delivered safely and reliably by the local utility company, a company still regulated by the Public Utility Commission.


Back to top

Q: What happens if I have an emergency or power outage?
A: Because your local wires company is still responsible for the maintenance and repair of the poles and wires, you will call them in the event of an emergency or outage at the number provided on your bill.

Back to top

Q: What has stayed the same in electric and natural gas service with deregulation?
A: Your current Transmission and Distribution Utility, continues to deliver electricity and natural gas to your business. Your local utility company still responds to service interruptions and continues to maintain the poles, wires and pipelines. You will continue to receive the same reliable service you are used to with your local utility company, regardless of which energy provider you receive service from.

It’s helpful to think of electricity and natural gas deregulation like the deregulation that occurred several years ago in the long-distance telephone service market. Consumers now have the power to choose the long-distance carrier of their own liking. However, regardless of which long-distance carrier they choose, their phone lines are still provided and serviced by the same local phone company.

Back to top

Q: What has changed in electric and natural gas service with deregulation?
A: You can now choose to buy your energy from a different provider than the original provider for your area. These companies are called retail energy providers. Additionally, your bill now looks different than bills you have received in the past, but each retail energy provider provides the same standard information.

Back to top

Q: Does everyone have the option to choose a new electricity or natural gas provider?
A: Unfortunately not. City-owned utilities and member-owned electric cooperatives have the option of giving their customers a choice of providers, or keeping things the same.

Back to top

Q: Why use an energy procurement advisor?
A: The answer is simple: we save you time and money. Staying in-tune daily with energy markets, providers and new opportunities is a full-time job. With Hutchinson Business Solutions (HBS Energy Management) you can capitalize on the benefits offered by deregulation without committing significant time and resources to understanding the complexity of the markets.

We get to know your business and your specific energy needs. Then we negotiate with energy providers on your behalf to get the best rates and options. After you have an agreement with a provider, we continue to service your business, and in case your needs change we are there to renegotiate new agreements that fit those needs. We do all the work. You receive all the benefits, including no out of pocket costs!

Back to top

Q: Will I notice a change of service when I switch my energy provider?
A: No. No matter which energy provider you choose, your energy will continue to be delivered safely and reliably by the local utility company, a company still regulated by the Public Utility Commission.

Back to top

Q: What happens if my energy provider stops serving customers?
A: If this were to take place, you would not be without energy. Your energy provider must give you advance notice to give you time to select a new provider. However, if you do not choose a new energy provider, your service will automatically be switched to another provider for your area. In this case, your energy rate may increase, so it’s in your best interest to find a new provider if yours stops serving you.

Hutchinson Business Solutions has been an independent broker in the deregulated natural gas and electric market for over 10 years.  Your local provider buys natural gas and electric wholesale and then sells it to you the customer retail. We put our clients in a wholesale position.

To learn more about deregulated natural gas and electric opportunities you may email george@hbsadvantage.com or call 856-857-1230. Our clients are saving from 10% to 40% on their supply cost. Your savings fall to the bottom line.