Wednesday, June 21, 2006
The plan would affect only natural gas rates.
By D.A. WILKINSON
VINDICATOR SALEM BUREAU
SALEM -- City council is moving ahead with the voter-approved plan to try to negotiate lower utility rates.
The city had two public hearings Tuesday to explain the realities of the utility aggregation program voters approved in May.
No one appeared at the first hearing at 1 p.m. One person showed up at the second hearing at 5 p.m.
The city has hired Robert B. Simmers, a consultant with American Municipal Power-Ohio Inc. of Columbus to help with the program. He hopes to have a new contract by October.
The vote won't affect electric rates because First Energy is the only local supplier.
Current system
Simmers said that Columbia Gas provides natural gas to about half of Salem, while the rest of customers use a number of different vendors.
Simmers explained that Columbia Gas sells natural gas at its cost. It also maintains the gas lines transmission system. That will continue.
Any potential savings to customers will come through negotiations with other companies that sell natural gas. Two companies have agreed to talk to the city about possible rates, and council hopes to find a third company to make a proposal.
Simmers said that if his firm can negotiate a contract for a year when natural gas prices are low, city users could see some savings.
The average Columbia Gas bill is $1,000 a year, he said. If the city can negotiate a lower rate, customers who take part in the program may see a $40 to $50 savings a year.
"We're not cutting gas bills in half," Simmers said.
Unknown factors, such as a mild or severe winter or supply problems may affect the price of natural gas.
Columbiana has had a similar program for years. Simmers said when natural gas prices have risen in the past, the city has used Columbia Gas until prices dropped again.
Roadblocks
One problem is that about half of the city's customers use Columbia Gas because they don't care what they are paying or don't want to be bothered trying to compare the rates offered by companies.
Simmers said the customers who will be really confused by the process are those who have contracts with other companies.
Simmers said the city can do different things to publicize the issue, but customers can't be contacted directly about possibly dropping their contracts in the middle of the pact. Some customers with other companies may have to pay a penalty if they decide to leave their company early to join in the rate negotiated by the city.
wilkinson@vindy.com