Natural Gas Choice Programs

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Self-determination. More than ever and in virtually every facet of their lives, consumers make daily purchasing decisions that attempt to achieve the greatest perceived value. They take great advantage of this control, except in one area.

Despite nearly a decade of natural gas choice availability in many states across the nation, consumers remain unaware of or unfamiliar with the concept behind their state’s natural gas choice program. Many natural gas consumers do not realize they have the ability to purchase natural gas in a way that makes the most sense for them.

The following information is designed to explain why natural gas programs were created and how the natural gas choice programs operate.

What is Natural Gas Choice?

Natural gas choice is a way for consumers and businesses to choose their natural gas provider instead of being limited to their local gas utility. During the 1980s and 1990s, federal and state legislation deregulated the natural gas industry, which created a path for states to implement natural gas choice programs. This legislation left the development of competitive access programs to each state. The graphic below details that a little less than half the states in the U.S. have implemented some form of choice to date. In essence, the development of competitive markets result in retail “unbundling,” or the separation of natural gas supply from natural gas distribution.

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Prior to deregulation, natural gas utilities were solely responsible for both meeting a customer’s requirements for natural gas supply and also delivering it to the customer’s home via pipelines. Postderegulation, states with natural gas choice programs have given consumers the ability to separate gas procurement from transportation. Companies now called natural gas suppliers have entered the market with many choices for competitively priced products. Today, many consumers have the ability to lock in prices for agreed upon time periods, insulating themselves from volatile natural gas price swings.

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Today, depending on the state or region, consumers may have multiple supply options from which to
purchase their natural gas needs. This open market creates competition, which results in downward price
pressure and more transparent pricing.

How Does Natural Gas Choice Work?

Gas choice is designed to operate in a way that makes it easy for a consumer to find the best price and term for their individual needs.

In each state that has adopted gas choice, the state’s utility regulatory agency maintains a list, often on their website, of suppliers authorized to operate in the state. Using this list, a consumer can shop for natural gas and arrive at a product and price that makes the most sense for them. This choice can impact a bill significantly because over the course of a year the cost of natural gas represents the majority of the total monthly charges.

When a consumer purchases gas from an authorized supplier, the natural gas will continue to be delivered to them by the local natural gas utility. Local utilities in states that have choice programs are required to deliver gas to homes and businesses, regardless of the chosen natural gas provider.

Each natural gas supplier has its own terms and conditions for customers; so consumers should thoroughly understand any contract they sign.

For more information, contact www.igsenergy.com.