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Natural gas options for CATA members

December 1, 2017
With the heating season upon us, businesses have decisions to make about natural gas options, Utility Management Group, a CATA allied member, has programs that can both reduce and stabilize a dealership’s natural gas cost.
Energy customers in the Chicago market have three options for purchasing natural gas, each with benefits: a variable rate, a fixed rate, and a rate for gas pre-purchased during non-winter months to be used the subsequent winter. Supplier programs and rates vary, and some suppliers offer only one option; others allow customers the flexibility to choose any or all of the options.
 
Variable Rates: The current rate market is favorable, with rates averaging about 35 cents per therm last winter, then dropping to the low 30s since April. Under the variable rate program, costs drop when the market is low. UMG has negotiated a program that consistently beats the utility rates. Last winter, its customers saved an average 21 percent compared to customers of Nicor, 20 percent compared to People’s Gas, and 38 percent compared to North Shore Gas. The downside: When the market spikes, as it does every few years, customers who buy 100 percent of their gas under a variable rate program are exposed to those spikes.
Fixed Rates: Under this program, customers agree to pay the same rate per therm for predetermined terms and volumes. Some suppliers offer the flexibility to lock whatever percentage of use and whatever months are desired, while other suppliers offer only the option of locking 100 percent of use for predetermined terms. Fixed rates offer price certainty, as spikes in the market will not impact customers under this program. It is not a savings guarantee, and when the market is low, fixed-rate customers tend to pay a premium.
Storage: Customers using this program purchase additional gas between April and October, and the utility stores the energy for use from November to March. The benefits of storage are twofold. First, natural gas rates generally are lower during non-winter months, so storage programs offer cost savings. Second, customers achieve a level of budget certainty. The average customer can store about 33 percent of the gas they use during the winter. Since that gas is already paid for, it is immune from potential winter spikes. And since the gas is paid for at the time it’s stored, summer gas bills will be somewhat higher, with winter gas costs dropping due to less gas being purchased during those months.
The natural gas industry is not a one-size-fits-all industry. Things to consider when reviewing options include what rates are offered, as many suppliers offer rates higher than the utility; what your budgetary goals are; and what flexibility suppliers offer. 
UMG’s approach is to review a customer’s budgetary goals and, only after understanding those goals, recommend a supplier and a program.  For more information on the programs that can benefit CATA members, call UMG at (630) 279-0117.
 
 

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