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Natural gas price negotiated |
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Wednesday, 07 October 2009 |
By WILLIAM LANEY
Managing Editor
Negotiators have hammered out a deal for consumers in the city of Wapakoneta’s natural gas aggregation, or opt-out, plan at $7.24 per thousand cubic feet (mcf).
On behalf of the city, Terry Leach, vice president of risk control at American Municipal Power (AMP), inked a 6-month contract with Direct Energy. The contract is effective Jan. 1 and ends six months later — half of the one-year deal expected to be signed.
Wapakoneta Safety-Service Director Bill Rains explained the rationale behind agreeing to a shorter term.
“If we would have went and signed a full-year contract, the price would have been significantly higher,” Rains told the Wapakoneta Daily News on Tuesday. “The natural gas that we could buy on a 6-month contract ended up being $7.24 and had we gone for a year contract then the price would have been higher because the natural gas on the futures market from July to December is more expensive.”
Rains said negotiators believe the price for the second half of 2010 was higher than they thought the price should have been so they opted to go with a shorter term “with the belief that those futures are likely to fall.”
Negotiations for the second half of the year are likely to start in March or April.
“We really thought at the last council meeting in September that we were going to get a good year rate, but it never really did work out that way,” Rains said. “I think what we are seeing is the futures market is mirroring reports the economy is rebounding and that may or may not be true. We are going to have to wait and see.”
During Monday’s Wapakoneta City Council meeting, Rains advised residents to pursue other options if they believe they can get a better price.
Residents in the city’s natural gas aggregation program can stay in the program and know they will pay $7.24 per mcf for the next 6 months regardless of what the market does.
While consumers can no longer enter into the opt-out program, Direct Energy is offering a similar program — direct choice marketing program — which provides consumers with natural gas at the same price and terms.
During a Wapakoneta City Council meeting on Sept. 21, councilors approved a direct choice agreement with Direct Energy, where the city recommends Direct Energy’s natural gas services to its residents.
“The direct choice program is not an aggregation program, but a marketing program where citizens enroll individually with Direct Energy,” Direct Energy Senior Public Relations Manager Yvette Hamilton said in a news release to the Wapakoneta Daily News. “we offer this program with the city of Wapakoneta as part of our commitment to being a long-term, customer-focused energy partner in Ohio.”
Hamilton advised residents or businesses, who are an eligible resident or business and wish to participate in Wapakoneta’s direct choice offer, to review their current contract to determine if they will be charged an early cancellation fee to switch suppliers.
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Last Updated ( Thursday, 08 October 2009 )
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