Gas choice rules fueling stiff bills - and some fury

2/20/2009

When retiree Janice Konoff got a heating bill for $575 this month, she was steamed - and not from the 68-degree temperatures inside her small southwest Toledo home.

A careful inspection of the statement determined that a Connecticut supplier had locked her into a rate of $1.77 per 100 cubic feet for natural gas.

That is 83 percent more than what Columbia Gas of Ohio charged customers for gas used in January.

"Why would anyone agree with that rate?" asked Ms. Konoff, who disputes claims by her natural gas supplier that she was notified in the summer that her rate would rise 50 percent for the winter months.

Cold weather and falling natural gas prices are putting to the test Ohio's Gas Choice program.

The experiment in deregulation allows customers of Columbia Gas and other natural gas providers in the state to buy fuel from alternative suppliers. But the suppliers aren't required to get approval from the Public Utilities Commission of Ohio before raising rates.

And many customers choose to lock in rates for six months or for a year.

In periods when prices are rising, that can add up to savings. But when prices fall, as they have in recent months, customers can get stuck paying exorbitant rates because they are under a contract to pay higher rates.

Regulators and consumer advocates say that customers should ask about cancellation fees before they sign up with suppliers, closely monitor rates shown on monthly statements, and not shy away from requesting rate cuts when prices fall.

And although the state regulators don't approve rate hikes for independent suppliers, they are responsible for making sure suppliers don't engage in deceptive marketing practices, said Shana Eiselstein, spokesman.

She added, however: "Once you sign an a contract, that's an agreement between you and that supplier."

Still, complaints about misleading information and materials rose 40 percent last year to 212 statewide, Ms. Eiselstein said.

PUCO's Web site includes an "apples to apples" comparison of rates offered by the state's gas utilities and other gas suppliers certified to sell in Ohio.

The most recent rates from eight alternative suppliers range from 90 cents per 100 cubic feet for month-to-month service from Volunteer Energy Services Inc. to $1.16 for a 12-month contract at Commerce Energy of Ohio Inc.

By comparison, Columbia Gas charges 97 cents per 100 cubic feet this month and has proposed 95 cents for next month.

Customers should be clear about whether they are signing up for a rate that will stay the same for six months to a year or whether the rate will change from month to month, the PUCO spokesman added.

In so-called fixed rate plans, suppliers typically charge between $25 and $125 when a customer wants to end the contract early and switch to a cheaper supplier, said Anthony Rodriguez, a spokesman for the Ohio Consumers' Counsel, a state watchdog. The switching process can take two months to be implemented.

Also advisable, Mr. Rodriguez added, is calling in meter readings during off months when usage is estimated by Columbia Gas, which handles gas delivery and billing.

The firm reads meters every other month. When usage is underestimated, the next month's bill can be even higher than usual.

"People really need to take a close look at bills," the Consumers' Counsel spokesman said.

"Don't just look at the amount and blindly pay the bill. Look at what is being charged."

Ms. Konoff, a retired human resources administrator at Toledo's Dana Holding Corp., concedes that she failed to do that.

It was only when she got the huge bill for February that she made a closer inspection.

She originally signed a one-year contract with MXenergy Inc., of Stamford, Conn., for 99 cents for each 100 cubic feet of gas used.

When that contract expired in March, 2008, the company renewed the contract at $1.18 but just for six months.

The company says its records show that Ms. Konoff was advised in the summer that rates would rise to $1.77 Oct. 1 for the next six months. But she claimed she never received the letter.

When Ms. Konoff called to complain about the huge bill received this month, MXenergy agreed to renew her contract for 12 months at 91 cents per 100 cubic feet. She was advised it will take at least a month to make the change.

By then, winter - and her current six-month contract - will be close to ending, the Toledoan noted.

MXEnergy, like other suppliers, automatically renews contracts unless a customer cancels.

The firm is hearing from more customers concerned about rates, spokesman Pamela Fink acknowledged. "Everybody is looking to save money and getting the best deals they can," she said.

The firm doesn't want to be unfair to customers. But when a rate is locked in, "we go out and purchase that amount of gas and expect to sell it."

Although prices for natural gas have fallen recently, they could quickly begin to rise in today's turbulent environment, she added.