Gas rates
I got an offer from Gateway Energy to lock in a rate for 1 or 2 years. They say that rates are at a “historic low”. Anyone have any thoughts about whether it’s wise to take the offer?
I got an offer from Gateway Energy to lock in a rate for 1 or 2 years. They say that rates are at a “historic low”. Anyone have any thoughts about whether it’s wise to take the offer?
if they are at a historic low under 25 per hundred thems….then sign with them. but I bet they are closer to .90
you should pay the spot marker price for gas for your house. At the same time, if you think that gas price will go up, you should get futures on gas prices. this will pay you if price will go up but you will not loose much if price go down. If you just buy “lock rate” forward contract with gas company – you will make same profit if price goes up but will loose if price goes down.
In other word spot price on gas for house and futures for speculation on gas price is better then contract you want to “lock” your rate in.
If you do not trust me on this – read Hull “Options, Futures and other Derivatives”. He explains this in details.
PSM = They don’t mention the rate – you have to make a phone call for it which I’ll do tomorrow & let you know.
My rate changes each month – as it would with NationalGrid. I was unaware of an offer to lock in at a certain rate. I do know gas rates are about to drop substantially. What rate are they offering? I suspect that no one really knows what’s going to happen in the future with rates – whether they will continue to drop or shoot back up.
PSM – I have the same arrangement as you & have worked out the equations. I just wonder about the likelihood that rates might go down even more. When I signed w/ ESCOs when they were first available, I know I did better than friends of mine who didn’t. (This makes it sound as if I want a crystal ball reading – I guess that’s true…) But, thanks.
My experience is not the same as slopenick’s. I did not sign to lock in, but chose Gateway as my supplier (National Grid is the transporter, so the delivery charge comes from National Grid). I have combined billing – so it all appears on one bill. There is no headache involved. ESCO’s have been able to undercut the majors (National Grid/Keyspan) for some time. It’s simple enough to price out per therm what each is charging.
I wouldn’t do it. It’s sort of a long story, but the heart of the matter is that your regulated gas utility (keyspan, con ed, whatever….) sells you your natural gas at cost, with no markup, while Gateway and other Energy Service Companies try to make a profit selling you gas. I find it hard to understand how they can both undercut a regulated utility on price and make a profit. Comparing prices is difficult, most people don’t bother and don’t want the headache. There’s enough to do without dealing with this stuff.