If it seems too good to be true … close the door on door-to-door energy retailers

Bruce Sharp, the superior Ontario energy analyst (and the one that initially exposed the hidden cost in the Oakville Generation Station relocation agreement), has some advice on how to handle calls from retailers offering a deal on natural gas contracts.

If it seems too good to be true … close the door on door-to-door energy retailers:

Union Gas and Enbridge Gas Distribution rates will jump April 1. This will be no joke, with Union and Enbridge gas supply rates each rising by 9 cents per cubic metre. These increases arise from Quarterly Rate Adjustment Mechanism (QRAM) processes, whereby natural gas utilities set temporary rates that reflect their view of natural gas prices for the forward-looking period and add a surcharge or rebate to reflect the previous quarter's variance between what customers paid for natural gas and what it cost the utilities to provide that natural gas. Two factors behind the recent variance are a direct result of this winter's cold weather, which caused both average natural gas prices and consumption to be higher than anticipated. The third factor is an increase to the forecast price of the natural gas utilities will purchase for their customers during the coming quarter.
What does this mean for consumers and residential natural gas retailers that might come to their door? Well, these so-called "door-knockers" are always out hunting for new marks. In particular, they thrive on these price blips as it gives them a fresh fear story to use to their advantage. As well, the past variance recovery embedded in new rates will give retailers a very large but temporary buffer. This will allow them to make their usually unattractive pricing look slightly more competitive or charge even higher prices and make more profit.
In making a decision, residential customers need to know their natural gas distributor makes no profit on natural gas sold and that the typical target profit on a retailer's residential natural gas contract is $200 per year.

If it seems too good to be true … close the door on door-to-door energy retailers | The Hamilton Spectator