Utility costs are a major part of most homeowners’ and businesses’ 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 and business owners 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.
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.
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.”
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.
Many people think natural gas suppliers and distributors are the same thing, but they are two separate entities. Understanding the difference between them is critical before you make a PA gas choice.
Natural gas distributors are gas utilities that own the infrastructure, allowing gas delivery to businesses and homes. They’re essentially the middle man between you and your gas supply. Distributors bill you for your gas usage and read your meter to measure how much you have used. But in a deregulated commonwealth or state, your distributor does not have to double as your supplier.
A gas supplier sources and delivers the gas to your home or business. Your supplier purchases contracts at wholesale, then sells the gas to residential and commercial retail customers. The distributor must receive a license from the state or commonwealth to sell gas. You can obtain a list of certified suppliers from the public utility.
Still not certain what the difference is between suppliers and distributors? Think of it this way:
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.
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.
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?
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.
If you have used our pricing tool, you know that not every PA gas company charges the same rate. You may wonder what the difference between all the companies’ rates is. A number of factors go into determining those prices, including:
Gas suppliers purchase energy in the summer, when there’s low demand, and then sell it back to consumers during the rest of the year. This can ease pricing during high-demand months. However, pricing can also be influenced by a number of external factors that your supplier cannot control, such as weather events or economic circumstances.
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!
To make the switch, you will need to determine if there are competitive offers from natural gas companies in your area of PA. Not everywhere in the commonwealth has PA gas choice or switch options. Availability depends on your location.
As you search for the right gas supplier, think about variables such as:
How do you make your PA gas choice official? You will need to provide your new supplier with your address and account information. Within the next few business days your new supplier will contact the utility company on your behalf to set up switchover date.
You may have questions once you have finished making the switch, such as:
Many people switch to natural gas to gain greater control over their utility expenses. As a business or homeowner, you want the most reasonable prices available. When you change to a gas company in PA with pricing you can afford, you can reduce your heating bills and put those savings toward other things, such as greater investment in your company or saving for the home heating season.
Natural gas is cheaper than other forms of heating as well. The many benefits of making a PA gas switch include:
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.
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.
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.
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:
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.
With deregulation, there are many natural gas suppliers vying for homeowners’ business. Keep in mind, not all offers are the same – it’s a good idea to ask questions about the offer to any supply company you consider doing business with. We suggest the following questions as a great place to start –
Some terms you’ll need to understand when shopping for natural gas in PA include:
When you switch to Shipley Energy, the first thing you’ll notice is that your bill looks very similar. You’ll still receive an invoice from your natural gas distributor, and that distributor will remain your point of contact for all service issues. The main difference will be a line indicating that you’ve chosen Shipley Energy as your supplier, and it will break down the rate you’re paying as one of our customers.
Remember, choosing Shipley Energy as your natural gas supplier won’t affect your admin and delivery fees — only the price of the gas itself will change.
Shipley Energy is more than just a natural gas supplier — we’re a longstanding business with deep roots in Pennsylvania. When we entered into the state’s natural gas market, we knew we had to deliver a level of value that reflects our reputation.
If you’re considering making a gas switch, you’ll benefit from our longevity, transparency, and flexible pricing plans. Check our current rates and sign up for service online today.
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.
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 90 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: