From the Casper Star Tribune
Natural gas customers in Casper, Gillette and other areas in Wyoming are facing the annual task of choosing their gas provider and the type of rate they will pay for the coming year.
Black Hills Energy, one of the state’s largest gas providers and the only one regulated to offer service in Casper, takes an unusual and somewhat controversial approach in its service: It allows customers to choose between eight gas providers, which all have their own plans.
Homeowners, renters and landlords can choose, for example, a regulated rate — one approved by the Wyoming Public Service Commission. They can also engage in calculated risks, such as rates that change according to the spot price of natural gas. Some providers offer an average bill that distributes the yearly cost of gas evenly to avoid seasonal spikes in billing.
Company officials say the program, now in its 21st year, provides flexibility for customers who want to get involved in their utility rates.
“Choice Gas gives qualifying customers an easy way to choose the supplier and price option that suits them best to help manage their monthly natural gas utility bills,” said Shirley Welte, vice president of electric and natural gas operations for Black Hills Energy-Wyoming in a statement.
Customers should have received a packet in the mail that they can send back, but they can also change their plan online or directly with one of the providers. Contact numbers are listed on the Black Hills website.
If customers do not choose a new rate plan or provider by April 27, their previous year’s plan will continue automatically. Once the deadline passes, however, customers are locked in until next April. The choice gas year lasts from June 1 to May 31 of the following year.
Traditional or choice?
So far, the majority of choice customers in Casper are sticking with Black Hills as their provider, though Wyoming Community Gas and Vista Energy Marketing are also popular, according to the company’s website. The top three providers are also dominating Gillette and Torrington’s service.
The most popular rate choice has historically been the regulated, pass over rate, what most people would understand as the traditional option. It is offered directly with Black Hills and arbitrated by the Wyoming Public Service Commission.
“That rate changes quarterly, and it’s approved by the Wyoming Public Service Commission,” said Norm Long, spokesman for Black Hills in Wyoming. “There is no markup. Dollar for dollar, whatever we pay, the customer pays.”
The regulated rate is favored by the Wyoming Consumer Advocate Office, a division of the Public Service Commission, that works on behalf of the Wyoming consumer.
Though it does not officially endorse a particular choice gas option, the office has been critical of the choice program since it was first proposed, saying it puts customers at risk of being locked into unfair rates. The office also maintained that third-party suppliers would be enticed to join in the program only if they were going to make a profit.
Long, the company spokesman, said early opposition to the program was largely a result of unfamiliarity with a choice option.
“There was a fair amount of confusion because it was a new program,” he said. “There were changes made over time that I think helped in the selection process, and we believe that the program allows customers to choose different options than they would get just under the regulated option.”
Regulating monopolies
The continued concern from the Consumer Advocate’s office is grounded in the way utilities, like gas and electricity, generally operate. Both gas and electric providers are mostly monopolies in their given area of service, and as such are strictly regulated to protect the consumer, explained Bryce Freeman, administrator for the Wyoming Consumer Advocate’s Office. Electricity providers, for example, have to justify any rate increase before they can pass it on to their customers.
This recently happened with Rocky Mountain Power, which announced Monday that it would seek a rate decrease because last year’s forecasts were higher than the ultimate cost of providing electricity. If rates are wrong one year, the next year’s changes will restore equilibrium for the consumer, Freeman said.
Black Hills’ regulated rate works the same way.
“It’s designed as a balancing account to make sure that customers pay only what the company incurs to buy the gas,” he said.
Outside of the regulated, pass over rate offered by Black Hills, there is no guarantee in the other options to restore balance or ensure consumers are charged only what the gas costs, Freeman said.
No other gas or electricity provider in the state has a choice program.
Though the Consumer Advocate no longer tracks the providers or rates that Wyoming’s Black Hills customers choose, about half of consumers used to select the regulated rate, he said.
Freeman acknowledged that there are potential benefits to other offerings, such as monthly average bills, which mean customers would pay more on the monthly electricity bill than they are accustomed to paying in the spring and fall but would avoid large bills that arrive in the height of summer and the depths of Wyoming winters.
Guaranteed rates, which are hedged in despite dips and spikes in the gas market, also appeal to some customers, he said.
“It could work out in your favor. If there was a Hurricane Katrina that took most of the Gulf of Mexico gas production out for a while, gas prices shot way up and you had a guaranteed rate, you would be insulated from that,” Freeman explained. “On the other hand, if you have the biggest gas find in the history of the world and gas prices collapse, you don’t get the benefit.”
In short, choice gas offers what it sounds like, options on what kind of bill customers prefer and what factors they want influencing the amount they are charged, said Long, the company spokesman.
“There is a certain amount of customers that don’t want to do anything. There are customers that want to get involved,” he said. “I think they have that opportunity to have the best of both worlds.”
