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Published: Tuesday, 3/27/2012 - Updated: 2 years ago

Coalition reaches new contract for natural gas

BY JON CHAVEZ
BLADE BUSINESS WRITER

The Northwest Ohio Aggregation Coalition, a pool of area communities that uses its buying power to bargain for cheaper utility rates, has negotiated a new contract for natural gas that will save area residents an additional 2 cents per hundred cubic feet on their monthly bills next winter.

The average customer in the coalition boundaries will save $15 to $20 from October, 2012, through March 2013, the coalition estimated. "It's not a fortune, but it's something in these tough economic times," said Mark Frye, president of Palmer Energy in Toledo and chief consultant for the Northwest Ohio Aggregation Coalition.

The coalition's new deal, which again is with IGS Energy, ends April 1, 2013. But when it begins, and how much customers may save overall, is an open question.

Mr. Frye said the contract allows IGS Energy to begin providing its discount, which is 2 cents less than Columbia Gas of Ohio Inc.'s price, no later than Oct. 1. However, IGS Energy has the option to start providing the discount as early as May if it so chooses.

"Since most people don't use much natural gas in the summer, I don't know how likely it is they would start doing this," he said.

The aggregation coalition represents about 75,000 residents in Toledo, Maumee, Northwood, Oregon, Sylvania, Perrysburg Township, Holland, Lake Township, and all unincorporated areas of Lucas County. Those residents are automatically included in the coalition and will receive the 2-cent savings whenever it starts unless they send in an "opt-out" form being sent to homeowners and renters starting last week. If a resident opts out, he pays either the higher Columbia Gas rate or tries to find an alternative supplier.

Lucas County Commissioner Pete Gerken said people receiving the letters don't need to take any action. "Probably the smartest thing is to do nothing," he said. "If you do nothing, you'll save money."

The aggregation coalition has a one-year contract with IGS Energy that is to expire Saturday.

That contract also provides a 2-cent saving from Columbia Gas' monthly price, which since April, 2010, has been based on the price of gas on the New York Mercantile Exchange, plus a service fee set at an annual auction conducted by the Public Utilities Commission of Ohio. In February the service fee, which in 2011 was 16.7 cents, was reset to 15.3 cents per 100 cubic feet, and it will remain that way until February, 2013.

The Northwest Ohio Aggregation Coalition was organized in 2000 as a buying pool to help negotiate lower rates for both natural gas and electricity. NOAC said that since it began negotiating in 2001, its contracts have saved area residents a total of about $12 million on natural gas and $50 million on electricity.

In 2010, the coalition was disbanded for natural gas when Columbia Gas began using its new formula for providing its rate, but then it was revived for 2011.

Mr. Frye said that this time, for the first time in many years, there was competition to provide the coalition with savings. Two other gas suppliers were bidding to supplant IGS Energy, he said.

"We actually saw some significant interest from various suppliers, but the lower Columbia Gas' price got, the harder it was to beat those prices," he said. "You can squeeze the lemon only so far and then it's gong to become very difficult to get anything out of it."

After judging the three offers, the coalition felt IGS Energy's offer provided the highest amount of savings for area residents, he said.

IGS, which is based in Dublin, Ohio, "has continued to figure out ways to internalize and utilize their capacity and costs and come up with a way to keep their prices lower than Columbia would otherwise charge," Mr. Frye said. "But it was very interesting this time around."

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.



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