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FPL Choosing a Natural Gas Supplier
Choosing a Natural Gas Supplier
How to Compare Quotes
Each customer has unique needs, but all share a common interest — a natural gas supplier you can count on for the long term, through the economy’s ups and downs. What important factors should you consider when comparing natural gas suppliers?
Let’s begin by reviewing pricing options. There are two main natural gas pricing structures: index/ floating price, which offers high price variability; and fixed price, which offers low price variability.
Index/Floating Price
• Price varies monthly based on a standard published commodity price index. • A stable transportation adder is added to the commodity index. • Allows you to benefit from gas market declines and the option to lock into a fixed price when the market dips. • Requires budget flexibility.
Fixed Price
• Provides greater control of your energy budget by locking in up to 100% of your forecasted usage at a set price for up to 36 months, with the remainder of your usage to float with market-based pricing. • Usage above your contracted amount is priced at index.
Regardless of whether the price is floating or fixed, you should understand what happens at the end of the contract term. Ask questions such as these. Will the fixed price return to an index? Will the index price auto-renew? Do I need to renegotiate pricing? Knowing what happens after the term expires can help you protect your business from unexpected price shocks.
After selecting the best pricing structure for your needs, there are other key things to consider when comparing offers. The charges outlined here are all associated with natural gas supply. Make sure the supplier specifically explains whether each charge is included in your price quote. If not, ask for a quote that includes these charges so you can make an “apples to apples” comparison.
Balancing
A charge associated with equalizing gas supplies to the local gas distribution company with gas consumed at your meter. Supplies must be balanced within a threshold specified by the local gas utility or penalties can be applied. Look for a supplier with no balancing charges.
Customer Usage Forecasting
Some gas marketers require you to provide monthly consumption estimates with daily updates if the usage will deviate from the monthly estimates. If the actual usage deviates from the estimate, you may be assessed an extra charge. Look for a supplier with no usage variance charges.
Swing Provisions
Some gas marketers charge the contract price for volumes within a set tolerance (i.e. 5-to10%) of a monthly volume forecast you provide; however, additional charges may be incurred for usage outside that band. Look for a supplier with no hidden swing provision charges that will clearly identify such provisions if included in the price quote.
Pass-Through Charges
All pass-through charges are the costs a supplier incurs to deliver the natural gas to the local distribution company’s (LDC) city gate on your behalf and are passed through to you. These charges vary by LDC and may be embedded as part of an all-inclusive quote or added on separately. Look for a supplier who is clear and upfront about how these charges are billed.
Adopting these guidelines when comparing quotes can allow you to better manage natural gas costs, improve your operational efficiency, and reduce the financial risk to your business.
Michael Meier is Sales Manager-Retail Natural Gas for FPL Energy Services, an unregulated subsidiary of Florida Power & Light Company (FPL). For more information, call (877) 375-4674, visit FPLES.com/natural-gas, or email FPLES@fpl.com.
