Gas customers warned that switching can be costly


David Kolata,
Executive Director,
Chicago, IL, U.S.A. — (METERING.COM) — September 19, 2007 – The Citizens Utility Board (CUB) has warned customers in northern Illinois that switching services from traditional utilities to unregulated gas suppliers could be very costly. Thousands of consumers have already been hit by soaring natural gas bills.

The CUB’s newly revamped Gas Market Monitor, a free online tool that tracks monthly price offers by unregulated suppliers, shows that 93 per cent of the plans marketed by these companies to date have cost consumers money when compared with prices of the regulated gas companies Peoples Gas, Nicor and North Shore. The average loss is high – $270.

The companies’ marketing materials prey on fears of skyrocketing natural gas costs and often give misleading information about gas prices. The CUB also has received complaints that door-to-door sales people posed as representatives from or claimed their service was endorsed by the Illinois Commerce Commission (ICC), Peoples Gas, Nicor, and even CUB.

To protect themselves from unwanted gas company marketing, the CUB is urging consumers to sign up for a little-known Do Not Market list managed by the Chicago area’s gas utilities. Gas suppliers are required to obtain a copy of the list monthly and remove the names on it from their marketing campaigns.

"Competition in the natural gas market was sold to consumers as a way to lower their heating bills," CUB Executive Director David Kolata said. "But exactly the opposite is happening. Hundreds of thousands of consumers are paying substantially more than they should on their gas bills, often because unregulated suppliers misled them or didn’t give them all the facts."

According to state and federal data, roughly 300,000 Illinois consumers are now served by unregulated, alternative suppliers. Nine such companies are marketing to consumers in northern Illinois and those marketing efforts kick into high gear in September, before the winter heating season begins.

Most of the suppliers offer fixed-rate plans which lock in prices for a period of one to five years. Some also offer a variable rate tied to an index that changes monthly. While no one can accurately predict the future price of gas, the track record of these new companies shows that it is extremely unlikely customers will save money.

For example, as of September 10, one supplier was offering to lock Chicago consumers into a price of about $1.18 per therm for four to five years. Yet Chicago’s natural gas prices have only reached that level once in Illinois history – and that was for a single month. The September price for Peoples Gas and Nicor Gas is about 66 cents per therm.

CUB will be working with social service agencies, community groups and local officials to get the word out to consumers about the risks of switching gas service.