Got Gas?

CAVEAT EMPTOR: Terasen is no longer the only supplier of residential natural gas. But do your research before signing up with one of the 16 gas marketers offering new fixed-term supply contracts

 Christina Montgomery

The Province

Sunday, May 20, 2007

Three weeks into B.C.'s newly deregulated residential-gas market, interest among an eligible 730,000 Terasen customers has been "strong," says company communication chief Joyce Wagenaar.

Exactly how strong won't be clear until June, when Terasen releases data on how many people have switched to a fixed-price gas marketer in the hope of saving money on Terasen's fluctuating prices.

On May 1, B.C. deregulated the sale of residential gas, allowing customers to sign on with alternative providers.

Wagenaar declined to say how many people have signed up with the 16 marketers now competing with Terasen or how many have since taken advantage of their contractual 10-day cooling-off period and cancelled their deals.

One figure was available: In the same three weeks since the May 1 launch, the B.C. Utilities Commission has fielded some 70 complaints about aggressive sales techniques.

Rob Pellat, secretary for the commission, said that in some cases, marketers, most of whom work on commission, had appeared at customers' doors demanding to see their gas bills.

In others, they failed to identify themselves as gas marketers or promised to save the customer money -- both of which are considered false claims that could lead to the loss of their licence, Pellat said.

The complaints were made against a "broad spectrum" of companies in what he referred to as a transition period to a new system.

No licences have been lifted, but marketers have been warned that they face suspensions that range from seven days to a permanent cancellation, Pellat said.

Superior Energy is one of the companies that has fired sales agents.

The gas market opened May 1 when B.C. began licensing companies to supply gas to residential customers at a fixed rate.

Within days of the launch, four of Superior's 400 agents selling gas in B.C. were dismissed, said Doug Walton, vice-president of sales and marketing.

The deregulation process allows residents to sign for a defined period at a fixed price with a licensed marketer. The aim for the customer is twofold: to stabilize gas bills and provide a hedge against potential hikes in gas prices.

Last week, Terasen was charging residential customers $7.66 per gigajoule -- the price for the gas itself, excluding service and other charges -- in the Lower Mainland, where an average home uses about 110 gigajoules a year.

By comparison, prices offered by marketers ranged from $9.24 to $10.99, depending on the length of contract signed. Some marketers' rate schemes include signing bonuses and slightly higher prices that allow environmentally conscious consumers to purchase carbon credits that fund eco-projects.

Clinton Roeder, vice-president of Direct Energy, one of the major marketers, has predicted that, based on his company's experience elsewhere in North America, 20 per cent of Terasen customers will switch to another gas marketer in the medium term and about 40 per cent within decades.

The marketing scheme allows customers -- with the notable exception of those on Vancouver Island and in some small mainland regions -- to lock in their gas costs through contracts of one to five years by signing supply deals with one of the licensed marketers.

The gas itself, whether purchased from Terasen or a marketer, continues to be delivered by and billed for through Terasen.

Customers can choose to remain with Terasen Gas, which is only allowed to provide gas at variable rates fixed quarterly by the B.C. Utilities Commission.

Terasen's price swings are based on the fluctuating, short-term volatility of North American gas-trading markets. Terasen Gas provides service to 95 per cent of B.C.'s natural-gas customers and is the third-largest natural-gas utility in Canada. It is a subsidiary of utilities giant Fortis Inc.

cmontgomery@png.canwest.com

SOME FIXED-RATE ALTERNATIVES

According to the B.C. Utilities Commission, there are 16 gas marketers currently licensed in B.C.

They offer fixed-rate alternatives to Terasen's variable rate, which for Lower Mainland/Squamish customers is currently $7.66/gigajoule.

Marketers offer unique packages, some including signing bonuses and the option of a higher rate that customers can use to support eco-friendly carbon offset purchases.

Not all marketers post their rates publicly. A sampling of residential rates from those that do, quoted per gigajoule:

Fixed-term suppliers 5-year 4-year 3-year 1-year

rate rate rate rate

Access Gas Services $9.39

CEG Energy Options $9.69

Direct Energy $9.49 $9.99 $10.49

Energy Savings B.C. L.P. $9.98 $9.98

Intra Energy B.C. $9.89 $9.99

MXenergy Canada $9.65 $9.72

Earth-friendly plan (carbon offsets) $9.82

Planet Energy B.C. $9.80

Smart Energy B.C. $9.24 $9.24

Summitt Energy B.C. L.P. $9.99 $10.99

Superior Energy Management $9.94 $10.19

Universal Energy $9.88 $9.39

Source: Terasen Gas website