If you get a call from an “alternative gas supplier” that claims it can save you money on your gas bill, should you hang up … or hang on for the details?

The Ticker asked DTE Energy and the Michigan Public Service Commission (MPSC) for the facts. Here they are:

For the past eight years, Michigan residents and businesses have had the option of purchasing natural gas from their local utility at a regulated rate, or from a number of alternative gas suppliers (AGSs) licensed by the MPSC. “Gas choice” lets customers choose their supplier based on price, services and incentives.

AGSs operate in areas served by MichCon (which services northwest Michigan and is DTE’s largest operating gas subsidiary), Consumers Energy, Michigan Gas Utilities Corp. (formerly Aquila), and SEMCO Energy.  They generally offer a fixed price for a contractual period of time. The price might be higher than the rate charged by the local utility, but often will be guaranteed not to increase during the contract.

AGSs can purchase and sell gas for a lower price than the utility because they can take advantage of a period of low prices and hedge those prices into the future. They can also use different levels of interstate transportation services to get the gas here.
So, are businesses and residents embracing gas choice? Yes, says Judy Palnau of the MPSC. The number of natural gas choice customers in Michigan reached an all-time high of 415,795 in June (56,466 commercial customers made the switch; 25,300 from MichCon).
 
“Many people are happy with the decision they’ve made (to switch),” Palnau states. “A lot of these (alternative supplier) companies are increasing business, not cutting back.”

Charles Koontz of Integrys Energy Services, an Illinois/Ohio-based gas supplier with a Traverse City office, points out that prices are at relatively low levels “and choosing a fixed-price offer might be as good a way to go.”

“Our price surveys of competitors suggests that our August monthly variable rate of $.5550 is among the best available,” he says.

But while utilities like MichCon can’t offer a fixed price, their rates are regulated by the MPSC and provided to customers at the same price the utility paid to secure the gas, DTE Energy’s Eileen Dixon points out. By state regulation, MichCon’s revenues are derived from service and distribution costs – not from a mark-up of natural gas prices.

“While we support our customers’ right to choose their supplier,” she says, “we believe it’s important to be an informed consumer and ask lots of questions to determine if changing suppliers will actually help you save money.”

To comparison shop natural gas prices, customers should check the rate offered by the AGS to the “Gas Cost Recovery” rate listed on their MichCon bill. 

Regardless of who supplies your gas, MichCon will continue to deliver it to your home or business, read meters, administer billing and respond to emergencies and leaks.

Most calls from an AGS are probably legit, Dixon notes. But if you’re unsure, go to www.dleg.state.mi.us/mpsc/gas/choicemcaddress.htm for a list of licensed gas suppliers in MichCon’s service territory.