Natural Gas Aggregation Program Ends

Latest News   ·   March 11, 2010

Customers Return to Vectren for Competitive Pricing

The Natural Gas Aggregation program that brought together consumers from Germantown with six other south Dayton suburbs to save thousands of dollars on their natural gas bills since fall 2009 will end as of March 31, 2010, when significant savings will no longer be available.

Instead, customers will revert to Vectren, which, from April 1, 2010 through March 31, 2011, will be able to offer a rate approximately 20 percent below the aggregation program price. This is due to the competitive pricing resulting from the Public Utilities Commission of Ohio’s annual natural gas auction held on January 12.

Coordinated by the Miami Valley Communications Council, the Natural Gas Aggregation program has allowed residential natural gas customers and many small business users to save 4.6 cents per ccf off the standard price charged by Vectren. Total savings for the 2009-2010 heating season have been estimated at $350,000-$400,000.

As of April 1, 2010, the pricing provided through the current natural gas supplier, IGS, will generate savings of only about $3 per year per customer over Vectren’s standard service offer. Program officials felt this was not substantial enough to warrant the program’s continuation.

For more information, please call the Miami Valley Communications Council at (937) 438-8887.

Frequently Asked Questions

What is natural gas aggregation?

Simply put, it’s a large buying group assembled for the purpose of using their combined purchasing power to negotiate the lowest possible price for natural gas.

Why was the program instituted in the first place?

The Natural Gas Aggregation program allows a customer group to use their combined purchasing power to negotiate lower natural gas rates. Since September 2009, the Village of Germantown has been a member of a seven-city natural gas aggregation group brought together through the Miami Valley Communications Council (MVCC), a council of governments certified by the Public Utilities Commission of Ohio as a Governmental Aggregator. As a group representing 26,000 natural gas customers, the seven cities were able to negotiate a natural gas rate 4.6 cents per ccf (100 cubic feet) less than the standard price charged by Vectren.

Why were the city governments involved in this program?

The Ohio legislature passed a law in 2001 giving local governments the opportunity to aggregate customers for group purchasing of natural gas. The state law mandates voter approval of municipal aggregation programs, so it has been approved by voters in each of the seven participating cities. The choice of joining together under the umbrella of the MVCC was a natural extension of the existing relationship.

What has been its impact?

The program has been successful in saving residents on the cost of their natural gas during the 2009-10 winter heating season. Through December, the program saved residents $188,850, and it is estimated that the savings may reach $350,000 to $400,000 by the end of March, when the program will end.

Why was the program suspended?

The MVCC decided to end the program based on the very limited savings that would be achieved with the new energy price from IGS (the supplier under the aggregation program) that will be in effect from April 1, 2010 through March 31, 2011. The new pricing would guarantee residents a savings of only three-tenths of one cent per ccf from Vectren’s standard service offer. This equates to approximately $3.00 per year for the average customer. The new rate is the result of the annual PUCO auction, held on January 12, which generated record low prices on natural gas. The new standard pricing that will be charged to Vectren customers is about 20 percent less than the current aggregation program price. Thus, continuing the program is no longer warranted.

Is there anything I need to do as a resident to ensure that I continue receiving natural gas?

Residents will not need to take any action but will automatically revert to Vectren effective April 1. Vectren will send a letter to aggregation customers to inform them that they will be reverting back to Vectren for gas supply.