Recently, I was reading through some natural gas provider reviews from Georgia residents and found several classic examples where customers made mistakes with their natural gas plans that wound up costing them more. In the interest of helping our other energy customers I’m sharing a few edited examples as common mistakes to show how other customers can avoid problems with their energy suppliers
Variable Rate Plans Have Rates That…Vary?
“I signed up for a low promotional rate. That good rate held for two months, then it doubled and after rose by 5 cents per therm, then by 9 cents and then up by 12 cents! I never got any notification about the increases. Are they within their rights?”
The short answer— yes. Variable rate plans seldom require any notification of change in the rate on the bill. That’s because the plan contract tells customers that the rate can change each month. Variable rates plans can go down or up or stay roughly the same.
In a related example, another customer knowingly signs up for a variable rate plan but puts their trust in what the sales rep tells them about future rates.
“I switched to XZ Company because they had a low variable rate and no cancellation fee. When I signed up I asked if the rate would stay around the current level and was told that it would. They also said that the rate I got was not a teaser rate. However, I only got the low rate for one month. The second month the rate was increased by 70% and the third month was almost double the first month.”
Of course, a sales person could conceivably say almost anything about future rates —but they don’t know for sure. After all, they’re not energy analysts, they’re in sales and that’s what they’re interested in.
As you can see, the frustration and anger of these customers is understandable, especially since they don’t see that they did anything wrong. Variable rate natural gas plans in Georgia are really attractive to some customers. They’re usually month-to-month, no contract, no cancellation fee plans. Natural gas providers in Georgia often offer them with low introductory rates that are well below the wholesale price. Consequently, their cheap, no commitment nature usually distracts customers from giving them a closer look. And that kind of distraction can wind up costing them more.
Both these customers seem to have discounted or ignored the main feature of variable rate plans. Variable rate plans will VARY from month to month depending on supply, demand, and weather. Usually, those low introductory price only last for the first month. Afterwards, the price goes up to the going market rate —which can be a LOT. The amount that energy rates change depends on the market price of electricity or natural gas in your state’s wholesale markets. Consequently, sudden demand and price fluctuations during winter and summer can make that monthly bill pretty painful to pay.
The Annual Energy Price Cycle
The way to save money on your natural gas rates for your home in Georgia is to remember that energy prices follow a predictable yearly cycle and generally stay within a normal-ish range. You can even check out Georgia PSC’s historic natural gas marketer rates in your city to see when during the year that they spiked. Prices for electricity and natural gas tend to dip in the fall and early spring due to lower demand.
For that matter, don’t put off shopping until summer. Once May arrives in the southern states, summer heat begins increasing demand for air conditioning —boom — the wholesale price shoots your local natural gas rates in Georgia to the moon because more natural gas is being used to power electric generators and everyone wants air conditioning. That’s why shoppers should wait until fall to lock in a longer term rate.
Read the Disclosure Statement
In our examples, the first customer seems to have signed on to the deal without fully understanding the plan’s Disclosure Statement. The Disclosure Statement states the plan title, the price per therms, whether it has a fixed or variable rate, whether the rate is an introductory rate or not, the term or duration, and delivery charges. The terms of the Disclosure Statement IS part of the legal agreement between customer and company. Consequently, customers should always read and understand the terms of the Disclosure Statement before agreeing to the plan.
If you agree to a plan over the phone, remember that you’re not trapped. Under the Right to Rescission in Georgia, you have three days to cancel the contract after you receive it in the mail by contacting the marketer.
How Variable Plans Can Work for You
Variable rate plans are not inherently evil. Variable rate natural gas plans work best when customers know how and when to use them. They can be just the thing for customers looking for a new fixed rate plan but want extra time. They sign up for an introductory plan for their home for a few weeks. Then they shop and switch when the end of the month comes.
Variable rates can also be cost-effective over the short term during the “shoulder months”. That’s especially true in springtime and autumn if you’re trying to capture great fixed rates while prices fall. So you’ve got to pay attention and switch to that fixed rate plan at just the right time. Stay vigilant!
* * *
One of life’s best ways to learn is to make mistakes. By learning from these examples, I’m hoping that energy customers will be better able to understand what they can expect and need to do in order to avoid having problems with their energy suppliers.