What’s the difference between a natural gas supplier and a gas utility?
This is one of the most confusing aspects of what we do, but it doesn’t have to be. In fact, it’s very easy to understand the difference between a natural gas supplier (or provider) and a natural gas utility, and that’s what we’ll explain in this article.
They’re both crucial for getting the natural gas to your business. And they both appear on your monthly gas bill. But they play very different roles in the process.
Knowing what each one does can help you feel more confident about taking advantage of the savings your SWiTCH Advisor will show you.
What is a Gas Utility?
Gas utilities are local distribution companies (LDCs). In Colorado, LDCs can be a public utility company such as Xcel Energy, Black Hills Energy, or Atmos Energy, or an LDC can be a municipal utility service that many have in smaller cities and towns.
The gas utility owns and maintains the infrastructure that delivers natural gas to factories, shops and homes in a given area. They respond to emergencies, such as damaged gas lines or gas leaks.
The local utility company will read your natural gas meter and bill you for monthly usage. Some PUCs still send a person to read your meter each month, while others have added telemeters to remotely track your usage.
Typically your rates will fluctuate throughout the year depending on demand from the gas pipeline – with rates being higher in the winter months. The rate you see on your bill is the same price the public utility pays for the gas because the deregulation of the natural gas industry prevents them from earning a profit on the gas itself.
Under deregulation, your gas utility company may or may not be the company that supplies your natural gas. Typically in Colorado, your gas utility will rely on a default gas supplier for their customers.
While they can’t choose their public utility company, commercial utility customers are able to choose thier gas supplier in Colorado thanks to natural gas deregulation. Each gas utility has their own rules, called tariffs, that will determine if any fees or taxes exist and how much they are. We’ll discuss in depth in another article.
Whether your gas utility is a municipal provider or a public utility like Xcel energy, know this:
Choosing an alternative natural gas supplier does not impact the delivery or quality of the natural gas that you receive.
What is a Natural Gas Supplier?
With the natural gas deregulation of the 80s and 90s, commercial customers in Colorado have the power to choose the company that supplies natural gas to their businesses. These gas suppliers are called third party natural gas suppliers or third party natural gas transporters, but we’ll simply refer to them as gas suppliers.
A natural gas supplier is a company that sources natural gas commodity contracts on the wholesale market from the gas pipelines and re-sells the gas directly to customers.
This type of market yields many benefits, including competitive pricing, excellent customer service and innovative products.
While gas utilities try to offer good prices, they aren’t competing with anybody for your business and neither is their default supplier. Their prices aren’t anywhere near those of the 70s, but without competition, there’s nobody forcing them to offer better prices.
Gas suppliers on the other hand are competing for your business on the open market and want to provide competitive prices. As many of us know, low prices aren’t enough to keep customers if customers service is terrible, so most gas suppliers have a heavy focus on customer service. During our vetting process, excellent customer service is the first characteristic we look for followed closely by extremely competitive pricing.
Innovation comes from a desire to remain competitive as well. Many gas utilities still have meter readers walking around and physically recording your gas usage. The use of telemeters that send usage to a central location for accurate billing is one example of innovation that we bring to the industry. A few of our customers had billing issues from their meter being read inaccurately, but those issues ceased after having a telemeter installed.
What’s the Difference Between the Gas Utility and the Gas Supplier?
Natural gas suppliers and utility companies play very different roles in the process of getting gas to customers.
The natural gas suppliers provide or purchase the actual commodity. The gas utilities, on the other hand, only deliver the natural gas to your business.
After becoming a SWiTCH customer, you will still be a customer of your gas utility and will need their help with:
- When you have problem with your gas delivery
- If you smell gas
- If there is a danger of leaking gas or broken pipes
- When you need to install a new gas appliance
We hope you found this information helpful. If you have any questions about gas suppliers in your area, please feel free to ask us in the comments section or send us a message.