Two Columbus Suburbs Leaving Gas-Rate Program

2 suburbs leaving gas-rate programs
Thursday, December 10, 2009 3:27 AM
By Dan Gearino
THE COLUMBUS DISPATCH
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Hilliard and Reynoldsburg are suspending their programs for buying natural gas.
In Hilliard's case, the city council made the move because of concerns that the program was leading to confusion and high prices for residents.
The switch comes as the commodity price of natural gas has plunged to its lowest level in years, a situation that has led some government leaders to question the value of fixed-rate gas contracts.
"In short, we just didn't feel like the current program was a good deal," said Kelly McGivern, a Hilliard City Council member.
Reynoldsburg's circumstances are more complicated. That program might be restarted next year, according to city officials.
The decision in Hilliard is in sharp contrast to that of a consortium of five other central Ohio suburbs -- Bexley, Dublin, Gahanna, Grandview Heights and Upper Arlington. The consortium has decided to maintain its gas program even though it pays the same price, $1.12 per 100 cubic feet of natural gas, that Hilliard finds unacceptable. The price is more than double that of Columbia Gas of Ohio.
The change will take effect next month for both Hilliard and Reynoldsburg. Participating customers will automatically switch to Columbia Gas.
A week ago, The Dispatch looked at the rates paid by the five-suburb consortium and showed how a typical household will pay an estimated $315 more this year under that plan than if it bought gas from Columbia.
The group has a fixed-rate contract that began last January, when commodity prices were much higher, while Columbia's rate, now 49 cents per 100 cubic feet, changes every month. Next month, the group's price will drop to 83 cents per 100 cubic feet, where it will remain through next October. The rates do not include taxes or fees.
In the five years since the consortium began, participants had net savings in two years (2005 and 2008) and net losses in the other three years, according to a Dispatch analysis. Data for Hilliard's program were not immediately available.
These gas programs, known as municipal aggregation, were approved by voters in each of the cities earlier this decade. The ballot issues specified that enrollment was automatic unless the customer decided to opt out.
Hilliard had three main concerns, McGivern said. One, the price was too high. Two, residents didn't seem to understand the contract terms, such as the need to opt out. And three, the city's gas consultant didn't cast a wide enough net for gas suppliers and pricing plans. She would be open to restarting the program if those issues can be fixed.
The consultant, Columbus-based American Municipal Power, or AMP, serves in the same role for the consortium, Hilliard and Reynoldsburg. In each case, AMP has brokered contracts between the cities and Dublin-based IGS Energy, for which AMP gets a fee based on the residents' gas usage.
"At the time we locked in the ($1.12 price), we were the best rate out there," said Terry Leach, who oversees aggregation for AMP.

Mindy Watkins, co-owner of Hilliard Dry Cleaners, gets gas for her home and business from Columbia.
"I don't have the time to shop for natural gas," she said.
She said she thinks the city will be better off without the fixed-rate gas plan.
Reynoldsburg hopes its suspension of its gas plan is just a temporary pause. Unlike the other cities, Reynoldsburg had a variable rate with a guaranteed 3.5 percent savings from the Columbia price. IGS Energy declined to offer those terms for 2010 because Columbia is about to change the way it purchases and prices gas.
Reynoldsburg city officials and IGS officials both say they hope to come up with a new contract for guaranteed savings sometime next year, once both parties have a clearer idea of how the new Columbia system will work.
dgearino@dispatch.com