Pennsylvania Gas Switch


Your Guide to the PA Gas Switch

Utility costs are a major part of most homes’ monthly budgets, and they can vary widely depending on the season. Any additional measure of predictability you can gain over these expenses is a good thing for your wallet and your peace of mind. That’s why the Pennsylvania Public Utility Commission launched the PA Gas Switch website.

With the deregulation of the state’s residential energy markets, many homeowners are still in the dark about what choosing a natural gas supplier means and how it can potentially save them money. The PA Gas Switch website provides a transparent, unbiased explanation of how your utility bills work and what the benefits are of shopping around for natural gas supplier.

How We Get Natural Gas to Your Home

Natural gas is a clean-burning fossil fuel that exists in pockets below the surface of the earth and under the ocean floor. It primarily consists of methane along with one carbon atom and four hydrogen atoms. Additionally, traces of nonhydrocarbon gases and hydrocarbon liquids are found in natural gas. Energy companies drill for this high-yielding energy source in natural gas fields, but methane gas is also commonly found in oil wells.

When natural gas is first drilled, it’s not clean enough to transport through the pipelines, so it must be filtered and processed to meet exacting standards prior to transportation. During this process, the gas companies also add that distinctive “rotten egg” odor as a safety measure. Gas leaks can be dangerous, and because natural gas is otherwise odorless, the pungent smell is added to tip off workers and consumers of any latent danger.

Once it meets acceptable standards, the gas can enter a vast network of pipelines, often referred to as “the grid,” and be carried to the different states. The pipeline branches off in hundreds of spots to deliver natural gas to different communities, and then it branches off again to bring it to specific homes.

Different companies are responsible for producing the natural gas, refining the gas, maintaining the pipeline and delivering it to Pennsylvania homes. In this respect, you can think of utilities as “retailers” of a sort, in that they sell the end product to the consumers.

What is Natural Gas Deregulation?

In 1999, the commonwealth of Pennsylvania deregulated the natural gas industry by passing the Natural Gas Choice and Competition Act (NGCCA). The aim of the bill was to allow Pennsylvania natural gas consumers greater freedom in choosing which natural gas supplier they can purchase their gas from. Under the act, homeowners now have a choice in who their utility company buys its gas from. While utility companies — such as Columbia and UGI — are responsible for delivering gas to your home, maintaining the grid and sending your bill, they don’t actually produce gas themselves. Instead, they buy it on the open market and are legally prohibited from charging you anything other than the going market rate.

Prior to the passage of the bill, utility companies would purchase natural gas from a supplier or suppliers and determine the rates for the end users: Pennsylvania homeowners and businesses. Since the passage of the NGCCA, natural gas users in Pennsylvania have greater flexibility to choose between more competitive rates from multiple natural gas suppliers offering many different pricing packages. This consumer-friendly initiative became known as the “PA Natural Gas Switch.”

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When you specify which company your utility provider buys gas from, you can take advantage of fixed rate and other pricing plans that can potentially save you money on a month-to-month basis.

How Does the PA Gas Switch Work?

According to the Pennsylvania Public Utility Commission (PUC), there are currently fifteen natural gas distribution companies that service PA, including Columbia Gas, PECO Energy and UGI Utilities. These are the natural gas companies you see on your natural gas bill and who you make your monthly payments to. However, these companies do not drill or refine the natural gas you use. They purchase it from dozens of companies like Shipley Energy.

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As a natural gas consumer in Pennsylvania, your bill is broken down into delivery charges and supply charges. The delivery charge portion covers the costs incurred by the natural gas distribution company to bring the fuel to your home via your local pipelines. Among other things, this part of the bill covers the expenses incurred by your utility for delivering gas and maintaining the natural gas distribution pipes. Your utility buys the gas they deliver to you from producers and suppliers, which is covered under the supply charge portion of your bill. This also happens to be the charge that the PA deregulation has allowed you, as a consumer, to control.

This is how gas switching allows you to take advantage of more affordable packages offered by competing natural gas companies. By periodically examining supply companies that deliver to your utility, you can opt for the most affordable option and reduce your gas bill.

Why Gas Suppliers Charge Different Rates

You now understand that the gas drilled by different energy companies is purified and refined in the same manner and then all commingle in the same grid. When your furnace or stove burns the gas, you can’t tell whether it was drilled from the Appalachian Basin or the Cherokee Platform, and it’s impossible for drillers or refiners to stamp a brand name on gas. So, why don’t all gas companies charge the same price for a similar product?

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For all intents and purposes, natural gas is a fungible product, which means one unit is essentially the same as another. Most commodities have some degree of fungibility and are traded on market exchanges like the Chicago Mercantile Exchange or the New York Mercantile Exchange. Natural gas is no exception. Natural gas prices are dictated by the law of supply and demand. If a refiner wants to sell their gas at too high of a unit price, there won’t be a demand for it at that level, and buyers will purchase from sellers who are offering their products at market price. The seller will either have to lower its price or wait until increased demand for the product warrants the higher price.

Natural gas prices fluctuate from hour by hour and minute by minute, which is not really a problem for traders who buy and sell gas in standard transaction sizes measured in a monthly contract size of 10,000 MMBtu’s (British thermal units). That kind of market uncertainty, however, is not something that most homeowners relish when they’re consuming gas in much smaller quantities. For instance, the average home uses less than 100 MMBtu’s per year.  Consequently, the companies that supply natural gas to the utilities that provide gas to homes and businesses tend to package their gas into rates that provide greater stability for their customers.

What the NGCCA did for Pennsylvania natural gas consumers is to set the suppliers in direct competition with one another. So, how do the suppliers make themselves more competitive when they’re producing and selling the same product to the utilities? They do this by timing the market, trying to cut costs, and reducing their profit margins so they can offer lower prices to the utilities. They also are able to offer different pricing structures than the utilities.  While most utility prices change on a quarterly basis, a supplier can offer price protection through longer-term products, price caps, or variable prices. 

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How Do I Make a Gas Switch?

The first step in making a natural gas switch is to compare rates.  Rates vary from one neighborhood to the next, so you first enter your zip code to see what the they are in your area. Check out Shipley Energy’s price checker below!

Check Pricing In Your Area

Check Pricing

You might immediately think that the lowest price you find is the best option, but that’s not always the case. There are many things to consider, which we will discuss in the next section.

Considerations When Making a PA Gas Switch

  1. Estimated Cost Per Month – This is an estimated monthly cost for the supplier portion of the natural gas bill. It is calculated by multiplying the cost per CCF (or cost per therm, depending on your utility) by the expected usage and adding any fixed fees that the supplier charges. Buyers tend to compare these numbers first when trying to choose between gas suppliers, and they may be the first thing you notice for each company — the dollar amounts are posted in much larger bright orange fonts — but choosing the cheapest estimated cost per month can be misleading. For example, a one-month introductory price in the summer can look significantly cheaper, but it would not include winter, when your usage is greater.  The estimated cost per month is also based on average usage, and your personal consumption can significantly affect its impact on your aggregate natural gas bill.
  2. Cost Per CCF/therm – This is the price that the natural gas supplier charges for Natural gas. Like the estimated cost per month, a low number doesn’t always result in a lower natural gas bill if you’re consuming more or your utilities’ distribution rates go up.   It would help offset those, though.   
  3. Price Structure – This figure will either be fixed or variable:
    • Fixed – The price will stay fixed for the length of the contract. It’s important to note that the price you’re paying per CCF/therm remains the same, but your bill can still fluctuate depending on usage.
    • Variable – The price includes all fees, but it can fluctuate routinely and is often based on market variability. 
  4. Cancellation Fee – This is the fee that the supplier charges for early cancellation of the contract. Cancellation fees exist because in order to provide the committed price, suppliers must hedge (purchase) the gas ahead of time for the consumer.  If the customer leaves in the middle of their term, the supplier is stuck with extra gas that they must sell back into the market, which typically occurs at a loss.   If you have an existing contract with a cancellation fee, you’ll need to factor that into your decision to switch natural gas companies before the end of your contract’s term.
  5. Term Length – This refers to the length of your contract with the natural gas supplier. Cancelling your contract may or may not incur a fee.
  6. Introductory Price – Some suppliers offer a discounted price for the first bill or few bills. This is important to know because your bill will more than likely change even when your consumption remains steady.
  7. Monthly Fee – Most suppliers bill you by ccf/therm used, but some add a fixed monthly fee. The monthly fee is often to offset billing and administrative costs.
  8. Renewable Energy – Even though it burns cleanly — with low carbon emissions — it is a fossil fuel, so it’s nonrenewable unless sourced from a landfill.   
  9. Term End Date – Some offers end at the same time for all natural gas consumers under a specific plan. If the offer does end, there will be a date next to the term end date. If it says “no,” the term ends when your contract individual contract expires.

If you know which features you’re looking for, there’s a filter on the PA Gas Switch website to the left of the screen. It includes a range selector, so you can put a cap on your price. By checking a few boxes, you can narrow your search down to a few different energy providers.

PA Gas Switch Checklist

Now that you have a working understanding about what each aspect of the listing means, it’s time to apply this to your natural gas supplier selection:

  1. Make sure your contract with your existing supplier allows you to transfer without paying a cancellation fee.
  2. Compare the Estimated Costs Per Month and the Cost Per CCF/Therm between companies.
  3. Choose your price structure.
  4. Take note of cancellation feeds or additional costs like monthly fees, application fees and connection fees.

Choosing a Natural Gas Supplier

Different suppliers offer different pricing plans that allow you to lock in your rate for a fixed period. Before deciding, look at how much you’re paying now and compare that to the current market rate and the rate being offered by the supplier. You can also visit the PA Gas Switch program website for in-depth information about fixed and variable rates. You’ll also find other important tips on what to look for when you shop for a natural gas supplier.

Check Pricing In Your Area

Check Pricing

Shipley Energy’s Natural Gas Rates

If you feel overwhelmed by the natural gas supplier choices or if you’re just confused about all of the options and factors, your utility company may be able to guide you through the process. Utilities are impartial when it comes to helping you select gas suppliers for their customers.  

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Shipley Energy is an authorized PA Gas Switch supplier for customers of Columbia, PECO, BGE and UGI. While deregulation has led to a lot of companies trying to take advantage of this new market, we have been a trusted family business serving local families for more than 85 years. We offer both fixed rate and variable pricing plans, and we can help you choose the best option for your home. Find out more by using our online rate calculator or contacting our team for more information.

Learn more about our other residential services such as:
-Heating Oil
-Propane
-Electricity 

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