Choosing a natural gas provider for your New York home that meets your family’s needs can be tricky. Choice availability, service areas, and pricing vary throughout the state. It’s crucial you take time to learn more about the plans, rates, special offers, and what to expect on your bill. Unfortunately, it’s easy to get muddled in the flood of information available online.
To help out, we’re going to wade through the confusing details and murky process so you’ll have a better understanding of how to snag the best deals on natural gas in New York.
How Energy Choice Works
Natural gas deregulation in New York lets you shop around to find the best price on natural gas supply in your area through the New York Power To Choose website. Once there, just enter your zip code, and you’ll then see a list of all the rate plan offers from your area’s Local Distribution Company (LDC) or Energy Service Companies (ESCO’s).
No matter which ESCO you choose, your local utility will continue delivering natural gas through its local distribution pipeline at the standard transmission price set by the New York Public Service Commission (PSC). Also, there will never be any interruption in service when you switch from an LDC to an ESCO or in between ESCO’s. All told, there are 19 natural gas utilities regulated by the PSC. Of these, ten LDC’s participate in natural gas choice.
How Pricing Works
Natural gas is sold to New York State consumers by the “therm” – a unit of heat equivalent to 100,000 British Thermal Units (BTU). Natural gas whole sale prices are set according to one million British Thermal Units (mmBTU). One therm = 0.10 MMBtu.
The wholesale price has been falling since 2009 due to low natural gas prices, increased pipeline capacity, and more competition among marketers. Your LDC typically sets its prices for natural gas according to a Gas Supply Charge (GSC). This is the price the utility pays for the actual gas supply. The GSC varies monthly and also includes those related charges to deliver it to the marketplace, making it a little higher than the wholesale market price.
ESCO’s shop competitively for the best natural gas at market prices all the time. This gives them far more flexibility in pricing, allowing them to fix prices at low rates for long periods or use variable pricing, or both. Consumers who choose an ESCO and lock in a low rate in advance of winter will avoid the monthly variability of GSC pricing and save money during bitter winter weather. Longer term contracts can avoid utility rate increases altogether. ESCO’s purchase natural gas from spot markets or contract with natural gas supply companies anywhere in the country. They re-sell this natural gas supply to you, the end user.
Like all New York natural gas consumers, you pay a standard delivery charge on the amount of gas you use. The natural gas pipeline system in the US is extensive, and gas travels through both interstate and intrastate pipelines to your local utility. From there, it is delivered to you through the local pipeline infrastructure. This rate is set by the New York PSC. Delivery charges can add 30% to 40% onto your bill.
Let’s Go Shopping!
After entering your zip code for natural gas service at the New York Power To Choose website, you’ll see rates listed in dollar per therm, which plans are either variable or fixed, the available term (from 0 to 36 months), and whether there’s a cancellation fee or not.
Variable plans, such as the one offered by the LDC, have prices that fluctuate monthly depending on the price of natural gas. Prices can fall or spike, depending on factors effecting both wholesale market prices and regional city gate prices.
Fixed rate plans have prices that don’t change for the length of the plan. Locking in a low fixed rate protects you from spiking seasonal prices both during the winter and summer as more power plants switch to using natural gas generators. A fixed price may not guarantee savings on your energy, bill but knowing the approximate monthly utility cost may help keep you on budget.
Things to Keep in Mind
- Always compare prices and services offered to learn whether their rates competitive. HINT— New York Power To Choose website does have a have a handy comparison feature.
- Value-Added Services: ESCO’s bundle incentives to new customers, so ask about other value-added services. These offers include appliance repair service or telephone service bundled with your energy bill, airline or movie tickets, and rewards programs. You could get an even sweeter deal just by asking.
- Look over online for reviews on their customer service. How long have they been in business? Are their incentives good? How do they rate?
- Signing up for an energy plan is a legally binding contract with an ESCO and may feature specific terms and conditions. These can include special fees for paying your bill by phone or online, deposits, renewals, and switching procedures. Always review these before committing to an ESCO’s offer.
- Cancellation Fees: Many fixed-rate plans have cancellation fees that kick in if you change your provider or plan before your contracted term expires. For example, say you sign up for a 12-month plan with a cancellation fee of $200. If you switch before the contracted 12 months is over, you could be hit with the $200 fee. If you want to switch to a new New York natural gas company, you need to ask your current one about any potential cancellation fees so you’re not surprised.
- Introductory Rates: Some plans offer discount rates applied to first-time customers or only apply to a set period of service. When that term expires, your rate will increase.
What Happens When You Choose?
- When you sign onto a plan, the ESCO must provide you with a plain language copy of the Terms and Conditions and a copy of the PSC’s ESCO Consumer Bill of Rights. If you do this over the phone or in person, you will need to complete a Third Party Verification (TPV).
- If you change your mind, you can rescind or cancel the change within three (3) business days without penalty. Call the ESCO and obtain a cancellation number.
- A verification letter from your LDC will be mailed to you to confirm you have chosen an ESCO. The letter will list that company’s name. If the wrong company is listed or you haven’t signed up to change, contact your LDC immediately.
- When your bill arrives, verify that the ESCO you chose is correctly identified in the supply portion of your bill.
- ESCO service agreements are allowed to automatically renew. Remember you will receive a notice from your ESCO within 30 days before it renews. This will inform you of new rates and terms, plus other options. You can also shop around for a new ESCO or go back to the LDC.
Good luck with your search for a natural gas provider in New York! To learn about available rates in your area from Direct Energy, please visit www.directenergy.com/ny/natural-gas-plans.