Are You Paying Too Much for Natural Gas?
Years ago, I signed up with one of those natural gas procurement companies that promised to be cheaper than PG&E, Tiger Natural Gas, Inc. I wanted to lower my utility bill.
A couple of years later, a stranger showed me how to determine what I would have paid if I had stayed with PG&E. He happened to be a solar installer. This was before I got into solar and learned how to read my own bills. It turns out, I was paying too much for gas. So, I switched back to PG&E.
Coincidentally, last week, I received a class action lawsuit settlement notification for Tiger. They had been accused of lying about the savings and were settling the suit. The notification estimates I might get about $20 back.
Telemarketers call me frequently about alternative natural gas suppliers. Ambit Energy is one that some of my neighbors have. I’ve encountered SFE Energy California, Inc. a couple of times. I have seen customer bills for all three of these alternatives, Tiger, Ambit, and SFE, that were higher than PG&E. This doesn’t mean that it will be true for you, but it’s probably worth a look!
Although some of this post is helpful in reviewing your electric bill, there are many ways in which electric billing differs from gas. It is simpler for me to compare PG&E to rooftop solar options than compare electric generation companies. Electric bills have more moving parts, and additional adjustments.
Paying it forward
With the above in mind, here’s how you can determine if a gas procurement company listed on your utility bill is higher or lower than buying gas from PG&E.
And Now, For Something Completely Different…Gas Bills
Lower Utility Bill Step One – Summary Page
Locate two utility bills. Choose one from winter and one from summer. For most people, the summer gas utility bill will be lower.
If you don’t have paper bills, log in to your PG&E account on your smartphone or PC and pull up each bill. The data you need won’t appear on your bank’s bill payment system or be seen in the total of each bill. You need the detail copy.
Pick one of the bills to start with.
NOTE: By choosing a summer utility bill and a winter utility bill, we should capture a high gas bill and a lower one. This will give you an idea of whether you may want to spend the time to review a full twelve months of bills, or more.
Lower Utility Bill Step Two – Confirm the Supplier
Look at the very first page of your PG&E utility bill, under “Your Account Summary,” and just above “Total Amount Due by (date).”
It should look like this (the language in parentheses or [brackets] may or may not appear):
- Current PG&E Electric (Delivery) Charges
- [MCE (or other CCA name) Electric Generation Charges]
- Current PG&E Gas (Delivery) Charges
- [(Other gas company name) Gas Procurement Charges]
If the [bracketed language] appears on your utility bill, it means you have another company procuring electricity or natural gas (or both) for you. If it doesn’t appear, you are buying your electric generation and/or natural gas from PG&E. In that case, the word “Delivery” will be missing (because PG&E includes delivery in the price of gas).
Don’t be surprised if you see a company you weren’t expecting is providing your electricity. Electricity “competition” is unlike that for gas. For gas, you, the customer, chose a provider. However, for electricity, some local political bodies choose a Community Choice Aggregator (“CCA”), such as MCE or the one below. In many cases, they set them as the default provider without notifying you. (More on this in a future blog post.)
Lower Utility Bill Step Three – What Would PG&E Charge?
Now, turn to the first page of the gas bill detail. For PG&E bills, you will find it after the electric bill pages, near or at the end of all the bill pages.
Assuming you are buying your natural gas from another gas company, this page will detail what you used in therms. Further, it will be divided into two tiers, and possibly into two months, if your billing period straddles two months (most do). The rates by tier and month will vary.
GOOD NEWS: We’re going to ignore all that complexity, because they already did the math we need. Comparing the billing history is easier than estimating the future.
Look for the “Gas Procurement Credit(s)” on the “Details of PG&E Gas Delivery Charges” page.
Find the negative dollar amount, representing the amount of money you would have paid to PG&E for the actual therms of gas you used, if you had bought it from them, instead of buying from someone else. This is what the footnote is trying to say.
If there are two time periods shown, there will be one for each date range.
Write down the amount of the credit(s), ignoring the minus sign. If there are two date ranges and two procurement credits, add them together.
PG&E deducts the procurement credit from their combined price for procuring natural gas and its delivery, because they only did the delivery part.
Now that we have PG&E’s price for the gas (if you had bought it from them), we need to find what the other company charged for it.
Lower Utility Bill Step Four – What did the Gas Procurement Company Charge?
Turn the page to “Details of [company name] Gas Procurement Charges.”
Skip right down to the Total. Write that amount down.
Lower Utility Bill Step Five – Which is Lower?
Compare the PG&E credit (equal to what they would have charged) for procurement from Step Three, above (ignore the minus sign), to the other company’s charge in Step Four.
Which one had the higher price?
In the example, the customer’s most recent bill, from January/February, appears to have saved him money using SFE, because the amount SFE charged was lower than the $67.25 credit that PG&E subtracted for gas procurement. But, before we celebrate the customer’s savings, there’s something else we need to check.
Lower Utility Bill Step Six – Seasonality and Billing Variances
What about a summer bill? Luckily, that question crossed my mind, and I took a look at a bill from last July. PG&E is a very big customer, and should be more competitive, I thought. I wanted to see how a smaller summer bill would compare.
Long story, shorter: surprise, surprise. Take a look at 15 months of bills:
My client had a summer bill where PG&E’s price for gas was considerably smaller than the winter bill. So, I went ahead and reviewed all of the bills he shared, in a spreadsheet. From March through December, his price from PG&E would have been smaller than SFE, even though PG&E had raised rates over the previous year!
Step Seven – Seasonal Price Changes and Budget or Flat Rate Billing
If your two bills do a similar summer-winter price flip-flop between which is the lower-priced provider, it may be necessary to analyze your bills for a full 12 months. It’s a good idea, anyway.
Look for These Clues
Subtotals that are the same amount a few months in a row are a sign that you should look to see if there is a flat rate plan in place. PG&E calls theirs “Budget Billing” and recalculates the payment every four months. (I remember when they used to call it “Level Pay Plan.”) SFE calls theirs “Flat Rate Gas Program,” apparently, as shown on the bill.
These programs attempt to spread the winter gas heating cost over spring, summer, and fall, and the summer electric air-conditioning cost over fall, winter, and spring.
A single utility bill is not, then, enough to tell you which one is lower, as one party or both, could be spreading out the charges.
Look for seasonality. Since we often don’t need to heat homes and businesses in summer, natural gas prices become cheaper, and it appears PG&E is passing along the savings. PG&E adjusts rates frequently. I’m not sure the other suppliers do so.
I was a bit shocked to see how SFE lowered the customer’s winter utility bill for two months by raising it so much for the other ten! The idea of a level payment is to spread the cost out annually, over 12 months, not to make it more expensive overall!
Be aware of different contract terms and habits. Each supplier may have different response times to price adjustments for their flat rate plan, or for seasonal price adjustments higher or lower. Also, each may have suppliers and contracts that renew or renegotiate on different schedules.
If you have another gas procurer, you might want to repeat this exercise once every 12 months or so, just to see if the competitors have surpassed or lagged behind PG&E, or each other.
Final Analysis and Perhaps a Future Lower Utility Bill
In the spreadsheet for this customer, the overall price paid for gas procurement in 15 months was $207.18 higher from SFE than PG&E would have been. On the most recent bill, SFE had finally responded with a 63 cent per month price cut.
Whoop-de-doo, even if SFE had reduced it 14 months earlier than they did, staying with PG&E still would have produced utility bills totaling $198.36, lower.
Look to see if the rate you were promised by the procurer was a teaser rate. Has it gone up significantly? Were PG&E rates going up or down in the meantime?
Rates Change
We didn’t get into looking at the rates per therm–it would be too hard for me to explain, here. But be aware that rates change frequently, and vary based on your geographic location as well. Do your best to compare apples to apples.
One thing that won’t change, however, is that PG&E, as a huge buyer of natural gas, is experienced at negotiating lower prices with gas suppliers (and higher ones with the CPUC). Unfortunately, they can’t really negotiate with individual customers.
Still, even with all their expertise and clout, I wasn’t expecting PG&E to undercut a competitor by as much as they did in the example case. The savings that could have been realized by sticking with PG&E would have been enough to run the A/C a bit longer during the summer months!
TIP: If you are considering switching to another gas procurer, get everything in writing, and make sure you can cancel at any time. Don’t expect the sales person to know what the company will do in the future.
We all know PG&E is under pressure to raise rates due to the wildfires and the San Bruno gas explosion. Remember, however, such work will impact the cost of delivery via pipelines and transmission lines, not gas procurement or electric generation. It’s as if the post office raised postage rates, affecting the cost of “shipping and handling:” no matter who procures your gas, delivery costs the same. Electric users may be able to save on shipping by installing on their own roof, but gas users are very unlikely to install a gas well in their yards.
So, when you hear news about rate increases, keep in mind that the delivery portion of the rate is applied equally to gas procured from any source, including these other suppliers.
Thanks and Decision Time
Again, I owe thanks to another solar professional that I opted out of Tiger and lowered my monthly utility bill.
Thanks is due, also, to my solar client who provided 15 months’ worth of PG&E utility bills. Normally, I only look at the electric history, and don’t even see the gas. I’m glad he did, because I learned something new.
Also, a big “thank you” to the several neighbors who shared their utility bills with me via my NextDoor.com request.
One of them reported that they had tried to cancel their gas procurer and go back to PG&E, but couldn’t get them on the phone. That’s not good, especially if they are out of state.
TIP: If you, too, decide to cancel, you should find the phone number on the right side of the “Gas Procurement” page. PG&E is not allowed to switch it for you for fear they would switch everyone, I guess. But, if you do have a problem reaching the supplier, call the contact number for the CPUC on the page. Good luck!
Competition or Manipulation?
By the way, I called the PG&E customer service number. They did confirm that the “Procurement Credit” amount represents what PG&E would have charged if I had bought from them. Also, that there were no other related adjustments for gas (as there is for electricity). You can do this, too, and should get the same answer.
However, if you ask them to compare to another company or rate, they probably won’t answer the question. Notice I didn’t ask them about the other company’s billing page. They probably know the answers, of course, so why don’t they answer?
Ideas so good, they have to be enforced
I believe the CPUC limits what the Utilities can say to compete for our business. Last year Concord, Martinez, Pittsburg, and unincorporated Contra Costa County chose MCE for electricity. Because both the MCE and PG&E websites used the same comparison chart, I suspected it was CPUC approved. (I called to complain that the example they used was a ridiculously smaller than average bill, but neither one could change it.)
Even if one Utility knows the other results in the higher cost, they may not be able to say so. Given the absence of free speech, try to word your questions in a way they can answer.
Hindsight is 20/20
Trying to predict whether you should sign with another gas procurer in order to lower your utility bill, today, is considerably more difficult than looking back at history.
However, history does prove that another procurer may cost you more, even those claiming they will lower your bill. And, you’ll want to bookmark this page for future reference if you do switch.
Consumers Have Clout
Will you opt to go back to PG&E or did you get a better deal from a competitor? Have you tried to cancel another gas procurer?
Have you found a procurer that has a lower price and has really lowered your gas utility bill? Or, did it simply spread the high winter cost over spring, summer, and fall? Who?
Your answers can help your neighbors reward, with their patronage, Utilities that provide better value. Please comment below, and Bookmark, Like, Share, Follow, or Subscribe. Contact me with questions or suggestions.
