PUC launches website for natural-gas shopping

Posted: January 31, 2013

The Pennsylvania Public Utility Commission is stepping up promotion of natural-gas shopping for residential customers, a once-moribund market that is showing signs of life.

The PUC this week formally launched PAGasSwitch.com, modeled on the agency's successful electricity-shopping website.

While nearly 2 million electricity customers have signed up with competitive power suppliers, the market for natural gas is more subdued. About 350,000 gas customers, or 12 percent, have switched.

Under state regulations, customers can shop for competitive suppliers of energy, potentially reducing their costs. The suppliers provide only the gas or electricity, while the local utility that owns the gas mains and electrical wires still collects a distribution fee on each unit of energy it delivers.

Electricity markets have become very competitive, with scores of suppliers offering products including renewable power, long-term fixed rates, and substantial discounts from the utilities' default rates. But the gas markets are not as dynamic because there are fewer opportunities for marketing companies to acquire gas supplies at substantially less than utilities pay.

A 2005 report by the PUC concluded there was not effective competition in the retail gas market, but the commission has changed some rules to remove obstacles for suppliers.

"We think there are enough suppliers in the market now that we launched the website," said Jennifer Kocher, a PUC spokeswoman.

About 14 competitive suppliers have offers to Peco Energy Co. customers listed on the PUC's website. But only six are priced below Peco's rate. And most of the offers are for rates that vary month to month, which means customers who switch need to stay vigilant to make sure their rates stay competitive.

"You can't acquire customers with a price higher than the utility's 'price to compare,' " said John C. Raisch, chief marketing officer of Alphabuyer.com, a Paoli group-buying firm.

Currently, Alphabuyer is offering Peco gas customers a price "just a hair under" the utility's rate" of 52.2 cents per hundred cubic feet of gas. Raisch said gas customers who switched saved a larger amount over the long haul.

No alternative suppliers have entered the Philadelphia market, even though the city-owned utility, Philadelphia Gas Works, has a higher rate of 57.1 cents.

Privately, competitive suppliers say the PGW market is unattractive because they face greater risks of losses from nonpaying customers.

PGW reimburses suppliers for only 95 percent of the money they are owed from nonpaying customers. Since the city-owned utility has a large number of customers who fail to pay, suppliers say they are unable to factor those losses into their gas price.

Utilities, on the other hand, are able to recover the losses from nonpaying customers by including the costs in their rates.

PGW also requires suppliers to bill customers separately, rather than sending out a unified bill, increasing the administrative costs for suppliers.

Contact Andrew Maykuth at 215-854-2947, @Maykuth on Twitter or amaykuth@phillynews.com

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