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Outlook slim for low-cost energy deals

By Jon Chavez, The Blade, Toledo, Ohio
McClatchy-Tribune Information Services

Aug. 26--There's a strong chance that customers in a metro Toledo natural gas buying coalition won't get a gas rate this winter that is below what Columbia Gas of Ohio can offer.

The Northwest Ohio Aggregation Coalition, a group that bargains for cheaper utility rates and represents customers in several area communities, said it recently asked alternate gas suppliers to make offers to sell gas to the coalition, presumably at a cheaper rate than Columbia Gas.

But the offers "were not very competitive off of Columbia Gas' standard offer," said Leslie Kovacik, a city of Toledo attorney who represents NOAC in contract negotiations.

A year ago, the coalition signed a contract with IGS Energy that saved participants between $20 and $25 total on winter heating bills.

That deal expired March 31 and Ms. Kovacik said she thought a similar offer would come this year, but it didn't.

"I was surprised, not because I could guess where the price of gas was going. I just sort of thought with the size of [the group] that NOAC can provide that we would get some attractive offers," she added.

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NOAC represent between 45,000 and 55,000 residents in Toledo, Maumee, Northwood, Oregon, Sylvania, Perrysburg, Holland, Lake Township, Ottawa Hills, and all unincorporated areas of Lucas County. Residents of those communities are automatically included in NOAC contracts unless they "opt out."

Ms. Kovacik said the offers NOAC received involved savings too puny to pursue. "We won't have a program just to have one," she said.

Mark Frye, an energy expert with Palmer Energy Group, which acts as NOAC's consultant, said he may contact suppliers again in late October or mid-November to see if they want to make revised offers. But a lower rate may not happen this year, he added.

Public rate auctions have cut the service fees Columbia Gas gets with its monthly rate, making it harder for alternative suppliers to beat the utility's rates, Mr. Frye said.

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"If you look historically, six-seven-eight years ago, Columbia's [gas cost recovery] rate was still in force and those prices were $2 to $2.50 a million btu. Currently, they're down to $1.40 per million btu. That's a significant decline over that time horizon," Mr. Frye said.

Also, suppliers might be worried that agreeing to a low rate now might hurt them later if another severe winter occurs, gas usage goes up, and they must buy additional gas supplies -- at higher prices -- to fulfill their contract, Mr. Frye said.

Without a NOAC contract, coalition residents likely will have to decide whether to stay with Columbia Gas or pick an alternate supplier for a fixed or variable rate, Mr. Frye said. "With a fixed price, more often than not those prices tend to be higher [than Columbia Gas] but then, you're paying for insurance" that your price won't go up, he said.

Contact Jon Chavez at: jchavez@theblade.com or 419-724-6128.

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(c)2014 The Blade (Toledo, Ohio)

Visit The Blade (Toledo, Ohio) at www.toledoblade.com

Distributed by MCT Information Services

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