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CUB: 90% of Alternative Supplier Offers Are Money-Losers

November 25, 2015 By Cheryl Kaften

The Gas Market Monitor, a free online tool provided by the Citizens Utility Board (CUB) posted some startling news this month about Northern Illinois’ natural gas market: Fully 9 out of 10 plans offered by unregulated suppliers have been money-losers since 2003.

CUB – a nonprofit organization that advocates for Illinois ratepayers – announced the numbers at a news conference on November 18, in order “to give Northern Illinois households a warning as they prepare for another long winter.”

While the group acknowledged that, “Nobody has a crystal ball about the future of the market,” CUB Communications Director Jim Chilsen stated that “Searching for savings from an alternative supplier has been like looking for a needle in a haystack.”

For more than a decade, Northern Illinois consumers have been able to choose a company other than the regulated utilities to supply their heating gas. CUB has been gathering supply prices offered by these alternative companies and feeding them into the Gas Market Monitor, which makes an apples-to-apples comparison between the plans and utility prices. Through October, the Gas Market Monitor shows that, of 9,046 plans analyzed since 2003, 94 percent have lost money compared with the prices offered by regulated utilities.

Indeed, Chilsen told reporters, “The bottom line is that shopping in Northern Illinois’ natural gas market is a gamble you’re far too likely to lose.”

While alternative suppliers don’t share how many customers are on their plans, CUB estimated what the outcome would be for each plan, if a customer were to stay with it through the end of the contract term, based on typical usage of 1,325 therms a year. The losses ranged from pennies to hundreds, even thousands, of dollars over the lifetime of a plan.

“I felt really taken advantage of,” Susan Nordstrand of Chicago said at the press conference, explaining that her energy bills rose from about $100 per month to about $300 per month  after she was accidentally signed on to a variable rate plan with Spark Energy. “I can say from personal experience, [alternative gas supply companies] don’t save you energy and they don’t save you money.”

CUB advises, “While 350,000 consumers were on unregulated suppliers as of December 2014, this might not be the best time to go with another company. Regulated utility prices are at their lowest point in nearly 15 years. And the utilities don’t expect average prices to go above 40 cents/therm this winter. Remember, you’re not required to switch to an unregulated gas supplier.”

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