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In the Forecast: Power of Choice For Natural Gas

By Jerry Knight
Monday, February 7, 2005; Page E01

"Tired of being at the mercy of uncertain energy prices?" asks the letter that came the other day from Washington Gas Energy Services Inc.

"Now you can lock out the shock" by locking in a guaranteed fixed price for the natural gas you burn for the next year or even two years, promises WGES, which is one of a handful of gas suppliers serving local utility customers.

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The company is offering to supply customers gas for the next year for just less than 85 cents per therm -- the energy unit used to quote retail gas prices. Is that a good deal? Who the heck knows?

Washington investors have trouble enough figuring out what to do with their 401(k)s, IRAs and thrift savings plan accounts, and now they're being asked to play the natural gas futures market?

Deregulation does that to you. Thirty years ago, buying natural gas to heat your home was like getting telephone service -- you called up the gas company (or the phone company) and you paid whatever your local utility regulators decided you ought to pay.

An energy crisis and a radical rethinking of the role of regulation later, utility customers no longer have their gas prices set by government officials. The market sets the price. That is, the market and -- at least in theory -- competition among natural gas suppliers, who ship their products to you through the pipes of your local utility, whose business today is delivering fuel as much as selling it.

In my Montgomery County neighborhood, there are four gas suppliers competing for residential customers: NOVEC Energy Solutions, an affiliate of the Manassas-based Northern Virginia Electrical Cooperative; ECONnergy Energy Co. of Spring Valley, N.Y.; BGE Home, an affiliate of Constellation Energy Group Inc., which owns Baltimore Gas & Electric Co., and WGES, an affiliate of WGL Holdings Inc., which owns the local utility, Washington Gas Light Co.

You can check prices for your area by going to your local gas utility's Web site, which will show which companies are competing to sell gas and what they are offering. Competitors and prices vary from state to state. The prices quoted are only for gas itself. It doesn't include what you pay your local utility for delivering the gas or other fees and charges. Those aren't as complicated as the extras on your phone bill, but they add up.

Gas prices are quoted by the therm, which is a unit of heat. It's impossible to wrap your hands around a therm of gas and difficult to wrap your head around the concept that it is 100,000 British thermal units. Think of it this way: Most people who heat with gas burn 900 to 1,000 therms a year. You can see how much you've used by looking at your latest gas bill.

In my neighborhood, ECONnergy is offering only a variable rate plan, which resulted in prices averaging about 85 cents a therm last year; the company's Web site does not project prices for the year ahead. BGE Home is quoting a price of 95.9 cents a therm, fixed for seven months. NOVEC Energy Solutions' deal is 88.4 cents a therm, fixed for 12 months. WGES's offers are 84.9 cents a therm for one year, 85.9 cents for two years. If I don't pick one of those offers, my gas will be supplied by Washington Gas at variable prices, which over the last 12 months have ranged from about 67 cents to 94 cents.

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