Rob Carrick says it’s time to lock in your natural gas price. He reasons that current prices are very low compared to previous highs. Buying a fixed-price contract for natural gas is like buying insurance against price increases, but for natural gas this insurance is quite expensive. Carrick says that the current gas supply charge he pays is 12 cents per cubic meter. (He also points out that at this low price, the supply charge is only about half of what you pay. The other half is storage and distribution costs.) The peak price was 42 cents per cubic meter. The cheapest price he could find to lock in for the next 5 years is 19.7 cents. To make these figures more real, let’s use my family’s consumption numbers. We used 4700 cubic meters of natural gas over the last year. This translates to a cost at current rates of $564 per year (plus roughly another $564 for storage and distribution). At the peak price, this would be $1974 (plus $564). At the best 5-year locked in rate,...

It’s fairly easy to figure out what a restaurant lunch and a fancy coffee a day are costing you, but other things are a little harder, such as the cost of bumping your house thermostat up a degree in winter. I have a hot tub attached to my pool that I use in late spring and early fall, but it isn’t obvious what it costs to use. Most of the time, water circulates through the hot tub and pool, so that both are at the same temperature. To use the hot tub, I have to divert all water flow to the hot tub and heat the water. I’ve always had the vague feeling that this may be more costly than it is worth, but hadn’t really worked it out. Since I use the hot tub during cooler weather when I’m no longer heating the rest of the pool, the amount of heating required varies with the pool’s temperature. The amount of heating required ranges from about 30 to 60 degrees Fahrenheit. So the question now is how much it costs to warm the hot tub by a degree Fahrenheit. After some experimentation...

The typical equal billing plan has customers pay exactly the same amount each month for gas or other utilities. If the utility gets the estimated consumption wrong, customers face a large correction at the end of the year. Many Enbridge customers are unhappy about the recent large end of year bills they received to make up for monthly payments that were too low. One way to avoid this problem is to use a smooth billing plan of the type I’ll describe. This plan allows for modest changes in the amount billed each month to correct for poor initial consumption estimates. This smooth billing plan has the side benefit that consumers can see with each bill whether their consumption is rising or falling. Without this feedback, consumers are encouraged to increase consumption . Suppose that your estimated consumption of natural gas is as follows: Jul: $30 Aug: $30 Sep: $60 Oct: $80 Nov: $100 Dec: $180 Jan: $220 Feb: $190 Mar: $140 Apr: $100 May: $40 Jun: $30 These numbers...

Utilities often offer some sort of equal billing plan that allows customers to pay fixed payments each month. This requires the utility to guess each customer’s consumption for the year. Any estimation error gets corrected at the end of the billing year. But, what effect does equal billing have on consumption? Ellen Roseman reported that natural gas utility Enbridge underestimated customer consumption over the past year by a wide margin. This has led to a predictable outcry from customers unhappy with the large bill they received to cover actual gas consumption. Lost in the discussion of whether Enbridge should have done a better job is the negative effects of equal billing (called the Budget Billing Plan by Enbridge). In general, people like predictability in the costs they face. It’s easier to plan exactly how much money will be left out of every pay cheque if all monthly costs stay constant. However, for many people, once a monthly amount is set, the mental link between c...

The Ontario Energy Board is seeking a $495,000 penalty against Summitt Energy for unfair practices in their business of trying to sign people up for 5-year fixed price contracts for gas and electricity. Ellen Roseman reported on this and a link to the full details can be found in the comment section below. Here is my favourite allegation: “AB attended at the residence of T.V. in Pickering, Ontario. He did not identify himself as being a sales agent from Summitt but rather stated he was a representative of Veridian, the local utility in Pickering. AB told T.V. that he had just changed the meter outside her home and she needed to sign a document to prove that he had attended at the residence. He did not explain that the document was for a five year fixed price contract with Summitt for the supply of natural gas and electricity.” I don’t think most of us are prepared for brazen lying of the type alleged here. I expect people to shade the truth a little, but just don’t expect some...

My wife observed that our most recent natural gas charge was $48.11 compared to $255.94 a year ago. That’s huge difference. I started thinking about the causes of this drop, but it wasn’t until I investigated further that I discovered the dominant reasons. The cause I was hoping for was the new furnace I had put in . No doubt this high-efficiency furnace helped, but not that much. The other obvious cause was the mild weather we’ve been having. Again, this helped, but isn’t enough to account for the big drop. The first thing I noticed when comparing the details in the bills was that the charges are based on “estimated readings”. Over the years I’ve often found these estimates to be wildly inaccurate. I almost stopped comparing the most recent bill to the year-old bill at this point when I saw the per-cubic-meter charge on the most recent bill was 12.9 cents. This seemed low compared to the last time I noted this figure. Sure enough, a year ago natural gas cost me 29.2 cent...

Ellen Roseman has put out another interesting collection of stories about people caught by the deceptive marketing practices of energy marketing companies. The first story is about a woman who received a cheque for $29.99 that she thought had something to do with a water heater she had changed. Unfortunately for her, she was wrong. The cheque was from Just Energy and the back said “To enroll, cash this cheque at your financial institution. Just Energy will supply 5 years supply at 33.9 cents/m3 under your natural gas supply agreement and JustGreen free of charge.” She deposited this cheque without even signing it, and now she has been locked into this contract. The writer estimated that the excess gas charges over 5 years will be about $10,000. It seems obvious that there is no real contract. She should be able to tell Just Energy to go ahead and sue her, except for one problem: both Enbridge and the Ontario Energy Board are backing up Just Energy. Her gas supply will be cut...

Just when it seemed that the fixed rate natural gas marketers had stopped coming to my door, hot water tank marketers started ringing my doorbell. So far I’ve had two of these guys show up, both pretending to work for my natural gas supplier, but they don’t. So, why would I turn down a free hot water tank? After all, my tank is more than 5 years old and may not have peak efficiency (according to one salesperson). I’ll save money because of the lower gas consumption. What these guys failed to mention is that they don’t work for a company that I already have a relationship with, the rental charges on the new tank will be higher than I’m paying now, and I would have to lock in this rental charge rate for many years (15 years according to some reports). Based on the rental charge I extracted from one salesperson and a quote from Sears for a new hot water heater, I could buy a new tank for less than three years worth of rental charges. So, when I decide the time is right to dump m...

Direct Energy is well-known for its flat-rate natural gas plans. By guaranteeing rates for a period of time, they are in effect acting as an insurance company. Any time you buy insurance, you need to find out if the other party is financially sound enough to follow through on its promises. According to Direct Energy, they currently offer a two-year flat rate natural gas plan in my area at a rate that is about 30% higher than the variable rate that I’m paying right now. This added 30% amounts to a premium for 2 years of insurance against rate hikes. But what happens if natural gas supplies are interrupted and rates spike up? Will Direct Energy be able to fulfill its promises if variable rates double? I have no idea, but anyone considering entering into a flat rate plan should find out. If Direct Energy isn’t able to maintain promised rates, customers could end up paying the flat-rate premium and then paying the high variable rates too. Any time we enter into agreements with ...

My natural gas supplier, Enbridge, has a program in place called TAPS where they give away some hot-water pipe insulation and efficient showerheads and kitchen and bathroom faucet aerators. My savings each year are supposed to be $45 on natural gas and $113 on water. But, plumbing often doesn’t work out very well for me. I started with the kitchen faucet. Swapping an aerator is easy, right? Unfortunately, our house is 19 years old and the parts were nicely fused. I got them apart, but a piece of the faucet broke. A consult with a plumbing expert confirmed the bad news: we needed a new faucet. Am I saving any money yet? Two more trips to the store for another consult and more parts plus a couple of hours on my back under the sink solved the problem. I think it will take a while to recover the total cost of $115.72 with my savings on natural gas and water. I’m afraid to try to install the other parts. This experience reminds me of the time my father-in-law got serious about savi...

Me : “Hello.” Unknown Caller : “Can I speak to whoever handles the gas bill?” Huh? This really threw me off guard the first time, but not the second or tenth times. I guess this saves them the trouble of trying to pronounce people’s names. These calls from 623-238-6131 have been quite persistent. When I was young, I used to talk to telephone solicitors as though they were people, but this took a lot of time, and it was hard to get off the phone. My next strategy was to yell at them, but by acting angry, it left me feeling angry for a while. Yelling at them didn’t help much anyway. The person on the phone is stuck in a low wage job and is not a decision maker with the telemarketer. The next strategy I tried was to say “just a minute” and set the phone down for a few minutes before hanging it up. This was amusing for a while, but sometimes I’d forget to hang up, and if my wife wanted to make a phone call, she would have to run around the house to find the off-hook phone. Now I jus...