The Akron Beacon Journal, Ohio, Betty Lin-Fisher column: Natural gas update for MXenergy folks

Jan. 17--Here's an update on natural gas prices for those of you who followed me with MXenergy's $6.79 per thousand cubic feet (mcf) six-month rate last August and for those of you who are looking for the cheapest public fixed rate available if you never locked in.

The last week or so has been brisk when it comes to natural gas issues -- on Jan. 6, I wrote a story saying the cold weather was playing a role in an increase in natural gas prices on the wholesale market. (You can read that online at http://www.ohio.com/betty). That caused the monthly rate to tick up for the first time this winter for customers of Dominion's rate who haven't chosen their own supplier and suppliers whose monthly variables usually are close to Dominion's rates. They went above the fixed rates customers locked into last fall.

But that increase also meant fixed rate offers increased.

It's also affecting those of us with MX's rate, which is to expire in the next month or so.

Unfortunately, things aren't always simple and this is the case with the MX renewal rates.

An undisclosed number of us signed up for the $6.79/mcf rate after I wrote about it at the end of August. It would get us through most of the winter and had no cancellation fee. While it was slightly higher than monthly variable rates, it gave us some security at a good price.

In retrospect, it turned out to be a great rate.

Here's where it gets sticky.

It normally takes Dominion East Ohio one to two billing cycles to switch your supplier, depending on when you sign up and what part of the month your billing cycle falls. What that meant was depending on your billing cycle, you either began your new rate with MX in September or October and your six-month rate stops at the end of February or the end of March.

By law, your gas supplier must notify you of your renewal rate at least 45 days before your end date. Most offers from companies automatically renew under the new contract terms, unless the customer contacts the company to cancel.

So for those of you whose rates end in February -- or about two-thirds of us who signed up, according to the company -- the company sent you letters within the last two weeks with a $6.99/mcf six-month renewal rate and a $25 cancellation fee.

While that price is 20 cents/mcf more than what you're paying, it was pretty competitive when the letter came out, since there were two other companies with public offers at that same price.

Now that the wholesale market bumped up last week and other marketers pulled their $6.99/mcf offers and bumped to upper $7 and $8/mcf offers, the $6.99/mcf looks even better.

But for the other one-third of the MX $6.79/mcf customers whose contract ends in March, it's not as good news. Since the March customers' contracts had not yet come up for renewal, MX had not gone out to buy its future supply before the run-up in prices (this is standard procedure).

So, in the end, MX is offering the March customers a $7.59/mcf six-month rate. This offer has no cancellation fee, unlike the $6.99/mcf offer. Customers who want their renewal rates do not have to do anything and will automatically get renewed.

The bottom line is, if you were among the two-thirds who had the February expiration and will get the $6.99/mcf renewal rate, you already have received a letter from MX. The letters will be going out shortly to the customers with the March expirations and the $7.59/mcf renewal rate.

"We do the best we can based on the market and commodities. This is just what happened this time," said MXenergy spokeswoman Pamela Fink, who added that the renewal rate is still cheaper than MX's public six-month offer of $7.89/mcf with no cancellation fee. (The cheapest fixed six-month rate available to the general public if you are looking for a new supplier, according to the Public Utilities Commission of Ohio's Apples to Apples chart that came out on Thursday, is Direct Energy's $7.69/mcf for six months with a $50 cancellation fee. You can find it online at http://www.directenergy.com or 888-566-9988.)

I am among the one-third of the customers who will get the higher rate based on my billing cycle, even though I told most of you about the rate. But that's the way it is.

Although it stinks to not get the same $6.99/mcf rate as the others, I did crunch some numbers to look deeper. Because those of us with our rate expiring in March will still get the benefit of the $6.79/mcf for an extra month, the difference between the two rates for six months from March through August is only $8.03 total when you compare the two rates. The $7.59/mcf folks will also get an extra month in September as part of their six months.

I did briefly give some thought to going back to a monthly variable for the next six months, and you can still do that if you're willing to take the chance, but the monthly prices have been steadily increasing. Even though they're still way below prices from even last year, eventually the recession is going to end and demand will go up for natural gas, which will push prices up.

I also debated whether to lock into a longer-term rate if it turns out that prices will continue to go up. No one has a crystal ball, so no one knows what will happen with prices, but at this point, the 12-month and longer rates are higher compared to the monthly and six-month rates.

The lowest 12-month fixed rates, according to the Apples to Apples chart that came out on Thursday, are IGS Energy and Integrys Energy, which both have $7.99/mcf rates for 12 months. IGS' offer (http://www.igsenergy.com or 877-444-7427) has a $100 cancellation fee and Integrys (http://integrysenergy.com or 866-336-5547) has a $25 cancellation fee. Some others have long-term rates as high as $9.42/mcf.

So I'll let the renewal go through with MX and continue to watch prices, but frankly, in the spring and summer, we don't use as much gas, so it's next winter when we'll really want another good price. I'm sure I'll be doing another analysis at the end of the summer.

If you want to switch to another provider, it can take one to two billing cycles to take effect. Keep that in mind to try to keep the $6.79/mcf rate as long as you can.

There's not much need for customers to call MX about the new rates, but if you need to contact MX, it is open on weekdays at 888-898-4427 or http://www.mxenergy.com.

For those of you who haven't entered into a contract with a provider and had Dominion randomly assign you to a state-approved supplier, your Standard Service Offer rate (SSO) beginning Tuesday will be $7.21 per thousand cubic feet (mcf), an increase of $1.32/mcf, or 22.4 percent, from December's rate. That price is still $1.26/mcf, or 14.9 percent, lower than the price a year ago.

Betty Lin-Fisher can be reached at 330-996-3724 or blinfisher@ thebeaconjournal.com.

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