WEST MICHIGAN (April 2, 2014) — Gas rates have recently spiked in parts of West Michigan, more than doubling many gas bills.
In Michigan, gas companies like DTE, Consumers Energy and Michigan Gas Utilities are regulated by the Michigan Public Service Commission. That means they have to get approval to raise or lower rates.
However, 12 years ago state lawmakers paved the way for other companies called “alternative natural gas suppliers” to create a free market. Those suppliers can charge what they want.
Now customers who thought they signed up for a good deal on the free market are finding out that’s not the case.
“The day I got my bill, the day that I got it, I noticed that something couldn’t have been right,” Carrie Hill of Spring Lake said.
Hill said her gas bill more than doubled between December and March.
Her utility company is Michigan Gas Utility, but she’s blaming her gas supplier for the spike.
She actually gets her natural gas from Volunteer Energy which she said she signed up for through a friend. During her three years with Volunteer, she said she didn’t have a problem until now.
“I did use a little bit more energy [in March], but unfortunately the major cost of my increase was the rate of the CCFs,” Hill said.
CCF is the rate you pay per unit of natural gas. Compare it to the price you pay for a gallon at the gas station. That rate jumped from 59 cents in January to $1.59 in March.
On their website, Volunteer Energy said the polar vortex and our hard winter caused a spike in demand and the price. However, Hill doesn’t believe that.
She said she called Volunteer Energy immediately after receiving the latest bill on Monday.
“I’ve left messages and no one will call me back,” she said.
So FOX 17 called the company.
“Your estimated wait-time is 14 minutes,” an automated recording said.
We finally got through to John Einstein, an attorney for Volunteer. Einstein said at the beginning of each month, utility companies tell the gas supplier how much natural to stock up on. This winter, he said, utility companies underestimated.
That means suppliers had to scramble and buy natural gas for higher amounts, and the cost was passed on to the customer. Einstein said Volunteer ate some of the cost.
FOX 17 also stopped by the Better Business Bureau. They’ve gotten 15 complaints about unregulated natural gas suppliers this week alone.
Phil Catlett is the president of BBB’s western Michigan branch. Although he sympathizes with people who are paying high rates, he said most customers signed up for it and failed to read the fine print.
“The most common circumstance for us… [customers] bring in their bill or they show us their bill, and we say we can see where your rate doubled. Now show us the contract that you signed. Let’s see how this violates the terms of the agreement,” Catlett explained.
“We have yet to find a case where the increased rate violated the agreement. It’s just the consumer didn’t know what they were signing,” he added.
“I think the bottom line here is that the consumer is really taking a risk when they sign a deal with an alternative energy provider, unless the terms of that contract are really clear and controllable with a regular constant rate and a cancellation clause that allow you to get out if you find its not working in your best interest.”
“Moving forward, I would never recommend it because this situation could happen to you, and it’s not regulated, and there’s nothing we can do about it,” Hill said.
Catlett said gas supplier’s still have to be licensed with the state to be an alternative seller, he said ultimately they’ll pay a price if they’re misleading people or engaging in dishonest practices. Bottom line, if you sign a contract and buy your natural gas on the open market, read the contract before you sign it.