Alternative Gas Supplier QA
The following answers to frequently asked questions about the Customer Choice Program are provided as a service to customers considering a natural gas provider other than SEMCO ENERGY Gas Company (SEMCO).
Customer Choice allows you to select your natural gas provider in much the same way you select your long-distance telephone service. Under this program, instead of SEMCO ENERGY Gas Company being the sole provider of natural gas, customers are given the option of shopping around for natural gas suppliers. SEMCO will continue to provide your local needs of delivering natural gas to your home or business as it always has, regardless of whether or not you select an alternate natural gas supplier. We also will continue reading your meter, handling billing, and responding to emergency calls. The primary difference for you would be an itemized bill listing the third-party supplier, including the price that you pay for natural gas from the third-party supplier.
If you choose a third party supplier, the amount you pay for gas will be negotiated between you and that supplier. The amount you negotiate will be displayed in the “Supplier Energy Charges” amount on your bill. SEMCO will continue to charge its normal service charges.
Are third party suppliers' Energy Charges lower than SEMCO ENERGY Gas Company’s Energy Charges?
Since the costs of gas can fluctuate, just as the stock market fluctuates, the cost of the natural gas is always changing. Historically, SEMCO charges have been lower than most third party suppliers’ pricing pools. There are several main reasons why a third party supplier’s charges would be different than SEMCO’s charges:
- Third party suppliers add a profit margin. By law, SEMCO ENERGY Gas Company cannot profit from the purchase of gas, and the actual costs are passed through to customers with no mark-up.
- SEMCO ENERGY Gas company's Energy Charge IS regulated by the Michigan Public Service Commission. The third party supplier's Energy Charge is not regulated by the MPSC.
- Since the third party supplier is not regulated, they have more flexibility in programs they may offer, such as locked in rates over long contract periods.
- Timing of gas purchases. Gas can be purchased many years in advance, and depending on market conditions, when the gas is purchased is a major factor of the cost. SEMCO’s typical strategy is to purchase approximately ½ our anticipated gas needs anywhere from 6 months to 2 years ahead of time.
- By law, SEMCO ENERGY Gas Company is the supplier of last resort. This means that if an alternative energy supplier fails to purchase gas for their customers, SEMCO will provide the gas. In some cases, SEMCO has additional costs a third party provider wouldn’t have, to ensure the reliability of service for all our customers.
What is the difference between a GCR charge and an Energy Charge?
The Gas Cost Recovery (GCR) charge includes more than just the Energy Charge and is the total cost to supply gas to SEMCO’s delivery system. The total GCR charge is composed of the following charges:
To accurately compare your third party’s Energy Charge to SEMCO ENERGY Gas Company, the comparison must be made to the Energy Charge and not the GCR charge.
- A Balance and Demand Charge
- Energy Charge
Balance and Demand Charge - This is what it costs to operate the system on a daily basis. This charge provides for the "cushion" of gas that the Gas Company uses to balance customer consumption with actual gas deliveries to the system. This cushion is necessary because it is impossible to predict the exact amount of gas a customer will use on a daily basis. In addition, as the Supplier of Last Resort, SEMCO ENERGY Gas Company is required to have sufficient pipeline capacity to serve all customers in its territory, including Choice program participants. This charge allows these costs to be recouped from Customer Choice participants as well as from SEMCO sales customers.
Energy Charge -This is the cost of the natural gas commodity itself.
Energy Optimization Charge – This is a charge mandated by the State to fund the state run Energy Optimization programs. One hundred percent (100%) of these charges are provided to the State of Michigan for these programs.
If you choose to buy natural gas from an alternate supplier, the price quoted will probably not include the Distribution Charge since that charge is applied and collected by SEMCO ENERGY Gas Company. Since SEMCO distributes your natural gas, regardless of which supplier you select, the Distribution Charge is applied to your bill by SEMCO. Therefore, for the purposes of comparing suppliers’ energy charges, it is more accurate not to include the Distribution Charge.
No. It is important to understand that you are under no obligation to select a natural gas supplier other than SEMCO ENERGY Gas Company. There is no set sign up period for the selection of an alternative natural gas supplier. You do not have to take any action to have SEMCO continue supplying your gas as well as transporting it to your home or business.
Not all natural gas marketers will supply customers in all SEMCO service areas. Individual gas marketing companies solicit customers in much the same way that competing long-distance telephone service carriers currently advertise and solicit new customers.
Use the Cost of Gas Calculator here to compare SEMCO's current rate with an Alternative Gas Supplier's rate.
There are additional factors that should be taken into consideration when reviewing third-party offers.
The following are some of the third-party factors that you should take into consideration, in addition to the Energy Charge:
Minimum Monthly Consumption - Some suppliers may require you to pay for a minimum amount of gas each month, regardless of your actual consumption. The average SEMCO ENERGY Gas Company residential customer uses about 900 Therms per year. You can use this figure to help determine your projected monthly costs.
Minimum Contract Terms - Some suppliers may require you to agree to a minimum contract length in order to qualify for the program.
Exit Fees - Some suppliers may charge an Exit Fee if you switch from their natural gas supply program. These exit fees would be in addition to any fees charged by SEMCO if you change back within 12 months.
Penalties - If the natural gas supplier you choose does not deliver the required amount of gas to SEMCO ENERGY Gas Company, penalties may be assessed. Ask who would be responsible for payment of these penalties.
Automatic Renewal - Review contract language carefully. Some contracts may contain language automatically renewing a contract unless you take specific action within a given period to cancel the contract.
A customer who has elected to take service under the Customer Choice Rate, Rate CC, may switch or cancel Suppliers at any time. A customer who has elected to take service under Rate CC may return to SEMCO’s sales rate at anytime, but must remain on the sales rate for a minimum of 12 months.
A customer may change suppliers one time in any 12-month period at no cost to the customer. A switching fee of $10 will be required for each additional change of supplier within the same 12-month period. If a supplier's actions force a customer back onto SEMCO sales service, the customer may choose another supplier within 60 days, regardless of the length of time that has elapsed since the customer left the SEMCO sales service. Except as noted before, a customer returning to the SEMCO sales service rates from the Customer Choice program must remain on the SEMCO sales rate for 12 months. If a customer chooses to return to SEMCO ENERGY Gas Company within the first 12 months, the customer may be charged the greater of SEMCO’s current Energy Charge or the current market rate.
SEMCO ENERGY Gas Company customers may enroll in the Customer Choice program at any time provided that their natural gas account is current at the time of enrollment.
A customer who has elected to take service under Customer Choice must remain on the Customer Choice program for at least 12 months; however, a customer may switch suppliers once during the 12-month period without a charge from SEMCO. After that, a charge of $10 will be assessed each time the customer switches suppliers.
A customer may only change from Customer Choice to the SEMCO rate during the 12-month period if:
If a customer returns to SEMCO ENERGY Gas Company sales service the customer must remain a SEMCO sales service customer for a minimum of 12 months.
- A residential customer exercises an unconditional right of cancellation in the first 30 days after the selection of an alternative supplier, or
- The customer establishes that the customer was enrolled by an alternate supplier without the customer's knowing consent (slamming), or
- The Supplier's action forces the customer to the SEMCO ENERGY Gas Company sales service, or
- The alternate supplier selected by the customer defaults under its Supplier Agreement, or
- The Supplier selected by the customer has its “Authorized Supplier” status revoked or terminated, or
- The customer chooses to leave the Customer Choice program and may be charged the greater of SEMCO’s current Energy Charge or the current market rate.
A Customer Choice participant may change or cancel a third-party supplier at any time by either written or verbal notice to the third party supplier. However, the customer may be subject to an early termination fee charged by the supplier. If a Customer Choice participant does switch suppliers, it may be done at the end of the customer’s billing month provided that we receive sufficient notice. The first time that a Customer Choice participant changes suppliers in any 12-month period, SEMCO will not charge a switching fee. A switching fee of $10 to cover our administrative costs, however, will be required for each additional change of supplier within the same 12-month period. If a supplier's actions force a customer to SEMCO’s gas service, the customer may choose another supplier within 60 days regardless of the length of time that has elapsed since the customer left the Company's gas service. Except as noted in the previous sentence, a customer returning to SEMCO’s system supply rates from Customer Choice must remain on the rate for 12 months.
That's the easiest choice. Do nothing. Participation in the Customer Choice program is not mandatory. If you do nothing to change your natural gas supplier, you will continue to receive the same great service from SEMCO ENERGY Gas Company that you always have enjoyed.
SEMCO ENERGY Gas Company does not maintain a list or recommend one supplier over another. Please see the MPSC website http://www.dleg.state.mi.us/mpsc/gas/choiceaddress.htm for a list of suppliers.
Do not give personal information such as social security, driver's license, or credit card numbers to any supplier. The only information the supplier requires to enroll you in Customer Choice is the name and service address and account number on your SEMCO bill.
Yes. You can stay on the Budget Billing Plan if you enroll in Customer Choice, but your budget payment will be based on SEMCO’s Energy Charge.
Your budget payment is based on the energy charge SEMCO ENERGY Gas Company controls, which is our Energy Charge. We cannot control the Energy Charge of a third-party supplier.
To find more detail on what deregulation is and learn what suppliers are currently recruiting customers, visit the Michigan Public Service Commission (MPSC)