What To Ask Before You Sign A Long Term Natural Gas Contract
Posted September 28, 2006 12:00 pm.
This article is more than 5 years old.
That first taste of fall is in the air and you know what that means – you’ll have to turn on your furnace. After last year’s record setting price for natural gas, it’s like burning money.
So you’ve probably wondered – should I sign one of those gas contracts that locks me into an agreement for years on end? The choice is yours, and you’re really hedging your bets that the price will go up this winter.
But there’s a lot of confusion out there. Home owner Kathy Adetuyi locked in for five years. She gambled and lost.
“I’m looking at $489.64 on a bill, and the funny part about it is the bill does say that my actual usage has decreased by 29 percent. But my bill’s about triple what it was two years ago!”
But there are ways to back out of the deal before it’s too late. Here are just a few suggestions about the rules you need to know before you sign anything:
–Never show your current bill or account number to anyone who comes to your door.
–Never sign anything at the door.
–Don’t feel pressured to renew at the last minute. By law, fixed contractors must send you a renewal notice 60-120 days before your deal expires. That means you have to hang on to the cancellation notice that comes with your original package.
–If you don’t? They get renewed for one year and almost always at a higher rate.
What are my payment choices?
Buy from the utility: If you choose this option, you’ll be paying variable rates depending on how much it costs the utility to deliver gas to you. The utility is not allowed to make a profit. If there’s a difference, and the utility finds it has cost more to deliver the energy than it has cost you, you could be charged a lump sum, or a surcharge over a period of several months.
Buy from a gas marketer: This means a fixed rate over a short or long-term, depending on what you choose. The fixed-price option means you know what you’ll be paying each month and can budget for the cost. The gas will still be delivered by the utility, and there’s no risk of being without gas as long as the bill is paid.
How to choose the best deal:
–Consider your budget, how much you’d like to risk, and your goals.
–Decide what’s more important – waiting for the lowest possible price, but risking paying a higher price, or the comfort in knowing what the price will be each month.
–Get expert advice on gas trends and prices to determine whether they’re likely to go up or come down.
–Check out the prices and incentives offered by the marketers, if you’re examining that option. Figure out which deal works best for you.
What’s the benefit of signing up with a marketer?
It’s a good idea if you want constant gas prices month to month, or if you believe gas prices are on the rise. Marketers let you choose long-term or short-term contracts, and sometimes offer incentives like rebates or credits. But remember:
–Utilities can’t offer fixed term gas contracts
–Marketers offering a variable rate often provide a guarantee that the price will be a certain percent lower than the utility rate. And they can’t offer you an agreement that’s longer than 5 years.
If I go with a marketer, how long does it take to make the switch?
It takes about 8-12 weeks for the appropriate paperwork to be completed.
If you’re switching from one marketer to another, you’ll usually receive 90 days notice before the end of your previous contract. They usually want 60 days notice of your intention to cancel, and you may have to go back to buying from the utility for a month before you can sign up with another marketer.
How do I cancel a contract if I’ve signed it?
Marketers must provide a written contract within 40 days. If you don’t get one by Day 41, the contract is void and you don’t owe them anything.
The marketer must also contact the consumer between the 10th and 60th day of the contract. You can, at that time, choose to reaffirm or not to reaffirm. If the former, you may be penalized if you try to cancel after that. If you don’t reaffirm after 61 days, the contract is void with no penalties.
There are three conditions in which reaffirmation isn’t required
- if you contact the natural gas marketer or electricity retailer more than 30 days after the marketer or retailer initially contacted you, and ask to be signed up to a contract; or
- if you entered into a contract via the internet; or
- if you responded to the marketer’s or retailer’s direct-mail campaign.
If a consumer signs up via the Internet, there’s no reaffirmation required, and the consumer has 10 days to cancel.
If your contract was automatically renewed, you can cancel within 30 days of being sent the first bill after the renewed contract takes effect.
How do I complain if I have a problem with my energy marketer?
First, contact the marketer and see if they can address your complaint.
Failing that, contact the Ontario Energy Board toll free at 1-888-632-6273 or, in Toronto, call 416-481-1967.
Courtesy: energyshop.com
For more information, click here.
And for added info, check out the Ontario Energy Board’s page, here.
