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Published: Thursday, 10/19/2006

Gas suppliers may offer break to keep clients

BY JON CHAVEZ
BLADE BUSINESS WRITER

Heating costs this winter are projected to be lower for many in northwest Ohio, but customers in metro Toledo may be able to get an extra break if they are locked into a high natural gas rate.

Many alternative suppliers to Columbia Gas of Ohio said they might grant the recently reduced rate to an existing customer rather than risk the homeowner canceling his or her contract and switching to another supplier.

Such a move, which is not advertised, would mean waiving the usual cancellation fee of $25 to $150 to try to maintain customers.

"We'll waive the fee from time to time if it's the best interest of the company by keeping the customer," said Doug Austin, a spokesman for Interstate Gas Supply of Dublin, Ohio.

The reason is simple economics. If an average customer uses 1,200 cubic feet of natural gas annually, the supplier has to buy that much fuel ahead of time. If the customer cancels, the supplier is out at least $120, but might have a cancellation fee of just $25, which doesn't make up the difference.

"It's better to do what you can to keep that customers and try to make up that loss over time," Mr. Austin said.

The situation applies to customers in the Columbia Gas territory, who under state law are permitted to choose from a variety of firms to supply natural gas. In all, the metro Toledo area has 170,000 such households.

Columbia Gas sets its rates each month. This month it is 91 cents per 100 cubic feet of fuel, and next month it will rise to $1. In the winter, when natural gas use is highest because of heating needs, the price typically rises.

Last winter, it peaked at $1.36, leading to people with monthly heating bills that totaled several hundred dollars, sometimes twice what they were for the same month a year earlier.

Eight suppliers offer competing rates, with prices that vary monthly which are typically lower than Columbia Gas' and with fixed rates for a year or two which are typically higher than current Columbia Gas figures. For the last few weeks, those fixed rates have dropped, one to 98 cents per 100 cubic feet for a year's contract.

About 63,000 metro Toledo customers belong to a bulk-buying group, the Northwest Ohio Aggregation Coalition, which has a fluctuating rate that is 4.2 cents lower than the monthly rate offered by Columbia Gas.

Besides Interstate Gas, Dominion East Ohio Energy, MxEnergy, Vectren Source, and WPS Energy Services Inc. all said they review requests individually and have waived cancellation fees to give valued customers lower rates.

"It just depends on where we are and whether we have a vested interest in retaining a customers. If somebody is about to leave us we may come up with a new rate," said Dan Donovan, a spokesman for Dominion East Ohio Energy of Pittsburgh.

"Sometimes they're even an unpublished rate, one that we think will win you back as a customer. In fact, that's what we call it: a win-back offer."

Mike Welch, a spokesman for WPS of Green Bay, Wis., said before moving a customer to a new lower rate - while not charging a fee - the company looks at all factors, including whether a customer on a variable rate plan wants to switch to a fixed-rate plan.

Still, if thousands of customers call and ask for lower rates, the supplier may not be able to accommodate them, he said.

From a cost standpoint, it is cheaper for a marketer to retain a customer than recruit a new one, said Jeff Mayer, president of MX Energy of Stamford, Conn. That is why so many are willing to quietly offer a new low rate.

A spokesman for the Public Utilities Commission of Ohio advises people to shop around with several suppliers for rates and terms. The agency provides a comparison chart on its Web site, at this address: http://www.puco.ohio.gov/Puco/ApplesToApples/NaturalGas.cfm?doc_id=479.

"For those customers coming up on renewals, it might be worth it to make some calls," said PUCO spokesman Shana Eiselstein. "Some are pretty savvy and will call around and say I've just been given this offer, will you make an offer to beat that?"

Contact Jon Chavez at:

jchavez@theblade.com

or 419-724-6128.



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