Buying Natural Gas Under Deregulation...Avoid These 3 Costly Mistakes

 


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Rising natural gas prices have caused many businesses to consider for the first time to buy natural gas from suppliers other than their primary utility company. Unfortunately, it’s not a simple matter of just seeing who has the lowest price. There are a lot of potential problems.

1. Only use the NAESB contract with the watermark.

Contracts can vary greatly from one company to the next. The North American Energy Standards Board (NAESB) has developed a contract which is a good starting point with a base level of certain standards. However, while you may be promised this contract, it can be modified.

Robert Lansburg, an energy expert with Auditek, a Novato, California firm that monitors utility companies nationally cautions, “If you don’t see the NAESB watermark, tear up the contract. Someone made some changes, and they’re definitely not for your benefit. "

2. Be clear if there is a penalty for exceeding the prior year’s consumption or load.

Bids vary as well, and a lower price might actually cost you more. How is that possible? A lower price can often be based on your using the same amount of gas as last year, but you’re penalized if you exceed last year’s consumption, or load. That penalty can wipe out any savings.

If your business has a steady, constant load, it might not be a problem. However, what if it’s a particularly cold winter? What if your business finds itself with large orders and increases production significantly? Or, what if you add employees?

3. Don’t lock in prices for 100% of your load.

One common strategy is to lock in prices as simple insurance for future increases. Be safe and only go with 50% of your load, or if there’s an unusual decrease as there was 10 days ago, you might have considered 75%.

Rising fuel costs are forcing businesses to consider raising their prices, put off new projects, and even shut their doors. Depending on your state, savings for natural gas are generally 5 to 10%. Be aware when shopping around to look at the fine print, and be very clear how long the company has been in business, and in your state.

Robert Lansburg is with Auditek, which monitors natural gas and electricity prices nationally. They uncover mistakes by the utility companies, and can be reached at 415-354-6140, http://www.auditek.net .

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