Voters in three Cincinnati area communities
overwhelmingly passed a ballot initiative in
November 2005 to allow their elected officials to
seek natural gas supply offers on their behalf. In
February 2006 a supplier was chosen, and gas began
flowing to residents and small commercial customers
in April 2006. This table shows the favorable
natural gas rates for the first seven months of the
program when compared to the alternative supplier,
Duke Energy.
The programs, designed by Independent Energy
Consultants, have a number of attractive features. When the programs
began market prices were at all
time highs. Our analysis predicted these levels
could not be sustained and prices would decline. Therefore, we
structured the programs to offer a
variable rate during the warmer summer months to
take advantage of the falling prices. In the winter
heating season when prices are higher, more volatile,
and consumption is greater, a fixed-price offer will
be set. The fixed price creates insurance that
prices will not increase beyond that rate. Customers supplied by the
local utility do not have
that protection. Their rates change every month and
the chart above shows how high prices went last year
during a time when residents could least afford it.
Similar rate spikes were felt by all Ohioans taking
supply
service from their respective natural gas utilities.
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