Michigan homeowners search for cheaper heat

By Erin Alberty

THE SAGINAW NEWS

As mid-Michigan braces for winter heating bills, more natural gas customers than ever before are shopping around for providers in the state's young open market.

The nationwide suppliers made their way into Michigan after the state deregulated natural gas in 1998. They use existing pipes and hook-ups of Michigan's long-standing utilities to sell natural gas at their own rates, often promoting fixed-price plans in an unpredictable energy market.

That means a customer pays the same price per cubic foot for a set length of time -- usually one to three years.

The rate might initially run higher than what they would pay the region's major utilities -- Consumers Energy or DTE Energy Corp.'s MichCon -- but it will remain static no matter what happens on the market.

"People are more aware of their energy costs and bills and their effects, and they're trying to control that," said Pamela Fink, spokeswoman for MXenergy Inc., a Stamford, Conn.-based supplier.

More customers sought that stability last winter after prices shot up. State figures from September show that 251,500 Michigan customers buy their natural gas from a company other than their regular utility -- up 17,500 from September 2005. That includes about 6 percent of Consumers customers and 14 percent of MichCon customers.

"In the early part of this year, quite a few people signed up for 'gas choice,"' said Judy Palnau, spokeswoman for the state Public Service Commission. "We would imagine that had something to do with a dramatic rise in prices last year because of the hurricanes."

This winter, however, state energy regulators expect natural gas prices to fall an average of $1 a month for Consumers customers and $51 a month for MichCon customers, who experienced Michigan's biggest price increases last year.

Does that mean a fixed rate is worth the cost? It depends on what happens in the market next year, Fink said.

"It's that protection in knowing what your bill is going to be month to month," Fink said. "You're paying that insurance ... on natural gas rates."

The other big consideration, Palnau said, is the terms of the agreement with the outside supplier.

"It is possible they could get a better deal from an alternative supplier. It's also possible, depending on the contract, that they would be better off staying with incumbent utilities," she said.

That could depend on whether the customer selects a fixed rate plan or a variable rate plan through the alternative supplier, she said.

Customers also may encounter fees should they end their deals early.

"We tell people to read through their contracts so they know what they're getting into and make sure they understand the price would not be regulated. We also encourage people to determine if there's a fee if, for whatever reason, they change their mind (and return to the utility). It's wise to know this before making the decision."

The state has licensed 11 suppliers to do business with Consumers and MichCon customers. Of those, four sell natural gas to residential customers.

One alternative supplier, Marine City-based My Choice Energy LLC, is available to SEMCO Energy Inc. customers. SEMCO serves 276,000 customers statewide, including the Thumb. v

Erin Alberty is a staff writer for The Saginaw News. You may reach her at 776-9673.