Utility Management Group
116 South York Road
Suite 213
Elmhurst, IL 60126
ph: 630-279-0117
fax: 708-401-0393
tj
Natural Gas
Our natural gas recommendations are meant to accomplish two goals. First and foremost, we want to reduce your cost. Because there are never quality issues with natural gas, there is no benefit to paying more than necessary. Secondly, given the volatility of the market, we want to provide options to stabilize your costs.
Purchasing Options
Customers in the Illinois market have 3 options as to how they can purchase natural gas; index rates, fixed rates and storage options. Not all suppliers offer all options. Additionally, suppliers offer different versions of those options. Understanding the differences in these options as well as supplier offerings is crucial to ensuring you're on the program that best accomplishes your budgetary goals.Index Rates
Index rates change monthly, depending on market conditions. Suppliers generally offer one of three types of index rates.
NGI Index based rates - rates based on a set cost above or below the NGI Index. The most transparent index based option.
Pooled Rates -your supplier shops the daily gas market, hoping to purchase natural gas at rates that are lower than the NGI Index. The success of these programs are determined by the competency of the supplier. Before entering into a pooled program, we recommend confirming the program's performance by asking for 12 months of invoices from customers currently on the program.
Cost Based Rates- you pay a set rate above the supplier's cost. The concern we have with this program is that there is no way to confirm what the supplier's cost is. As with pooled rates, we recommend confirming the program's success by asking for invoices from current customers.
Fixed Rates
You agree to pay a specified rate for defined volumes and for a defined period of time. The most important fact to understand about fixed rates is that they are not a savings guarantee. Your fixed rate may be higher or lower than the market rate. It's a tool to control your cost that if done correctly, can offer benefits. We provide customers with 10 years of pricing data. If you can lock rates at the bottom end of that pricing spectrum, we recommend considering doing so. If the available fixed rate offerings are too high, we recommend remaining on an index rate.
Storage Options
Your utility gives you the option to store a specified amount of natural gas. The idea is to purchase gas when prices are low and withdraw it when prices are high. You have this option, the question is whether you own the benefits or your supplier owns them.
Suppliers should either offer you a discounted rate in exchange for owning your storage rights or help you manage it. If you own your storage, confirm whether your program is on auto pilot, meaning gas will be injected and withdrawn on a preset schedule regardless of current rates or if the supplier manages it, reviewing options monthly and making decisions based on market conditions.
Delivery Charges
The amount you are charged for the delivery of your gas is not negotiable.
The rates are set by your local utility and are the same regardless of who you purchase your natural gas from, and will be determined by which program you are on.
Prior to entering into an agreement, we recommend asking your supplier or broker for an analysis of your delivery charges. Illinois customers can choose between small user or transportation programs. Being placed on the wrong program can offset any savings you experience from your gas supplier.
Please be aware that many suppliers only offer one option and will place you on that delivery option regardless of the increase in your cost.
Transparency
Regardless of which options you choose, your supplier should offer a clear explanation of how your account is going to be managed. The program should be flexible, allowing you to select options based on your budgetary needs as opposed to being sold on the benefits of one option over another.
We do not recommend managed programs where the customer has no say in what decisions will be made or in which the supplier can not detail how and when gas will be purchased.
Copyright 2011 Utility Managemnt Group. All rights reserved.
116 South York Road
Suite 213
Elmhurst, IL 60126
ph: 630-279-0117
fax: 708-401-0393
tj
