Natural Gas customers experience sticker shock
Many gas customers have been hit with high utility bills over recent months as frigid winter temperatures have caused huge price spikes in natural gas. As cold weather caused the demand for natural gas to increase, utilities were forced to call critical or OFO (Operational FLOW Order) days in order to protect the operational integrity of the pipeline.
When Critical/OFO days are called, natural gas utilities may charge a higher amount for any gas they supply in addition to what the provider supplies. What this means for the customer is that the provider, in order to re-coup some of the expenses imposed on them by the utility, may end up charging them for any usage over their contracted amount during this time period.
Not every customer will fall victim to Critical/OFO days. The costs are handled differently depending on the supplier and local distribution company (LDC). Some suppliers have built-in precautions for certain rate classes so they don’t need to pass on Critical/OFO costs to some of their customers, while other suppliers will pass these costs on.
Protecting yourself from Critical/OFO days
Including a swing component in your natural gas contract can provide some protection, since a swing component allows you to use more or less natural gas than your contracted amount without incurring a penalty. However, even with a 100% swing contract, you might not be able to completely avoid charges for Critical/OFO days, depending on the regulations of your supplier and utility.
Although contract prices including swing are generally higher than those without, there are instances when the added protection becomes worthwhile. For example, if the account illustrated in the following graph had included 100% swing, they would not have been charged the high Critical/OFO rate. They would have been charged their contracted rate instead.
Still have questions about your natural gas bill? Need help managing your next gas contract? Let AUS help.
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