The "Choices for You" program allows Peoples Gas and North Shore Gas customers to choose an alternative company to supply their natural gas.
How does it work?
Traditionally, a utility buys gas on the market and uses its pipelines to deliver fuel to your home. The utility is supposed to sell the gas at the same price it pays, with no markup. Opting for "Choices for You" means you will continue to pay Peoples Gas or North Shore Gas to deliver the heating fuel to your home, but you will pay a different company to buy and supply the actual gas. Unlike your utility, the rates and services of your new supplier will not be regulated or reviewed by the Illinois Commerce Commission (ICC). Your new supplier charges whatever it wants.
What kind of plans do the companies offer?
Most of the plans fall under one of two categories.
Fixed-rate plans won't change for the length of the contract. Their simplicity may be appealing but such plans will likely charge a premium price, and you could lose money in the long-run.
Variable-rate plans fluctuate from month to month. These plans offer the same kind of pricing as Peoples/North Shore Gas, with the same degree of uncertainty about what the actual price will be. The prices are tied to a supplier's cost of gas or some market indicator of gas prices, plus a markup. When you opt for a variable rate, you're betting that the new supplier can do a better job buying gas than the utility. That may not be a good bet.
Are there other charges?
Yes. Some suppliers charge a monthly fee. The companies also charge a separate fee that helps cover "balancing" costs for maintaining appropriate pressure in the utilities' pipe systems. The impact of this charge is lessened by a rate reduction customers in the Choices for You program have gotten since February 2008. It's a reduction in the rates they pay Peoples Gas or North Shore Gas to deliver the heating fuel through their pipes from an alternative supplier to their homes. Originally, it was a per-therm reduction, but that changed in January of 2010, when it became per month. (So far, it's been less than $2 per month for Peoples, and less than $1 per month for North Shore.)
Also, beware of an "exit" fee if you want to get out of your plan before the term of service ends. Most companies have an "opt-out period" that allows a customer to exit without being penalized. Know when that period begins and ends.
What about some alternative suppliers' billing methods?
Like Peoples Gas, the utility, an alternative company buys more gas than customers actually use in the summer and stores the extra for winter usage. Unlike Peoples Gas, some suppliers may bill customers for the extra gas immediately—before they actually use it. This has led to unexpectedly high summer gas bills, and confusion, for some customers. Companies that use this method have said it can lead to lower winter bills and overall savings in the long run. But nobody can guarantee savings.
What new consumer protections just became Illinois law?
A new state law mandates that any customers signing up with an unregulated supplier on or after April 10, 2009...
1. Have up to 10 days to cancel their contracts—once the supplier's charges first appear on the gas bill—without paying a cancellation penalty.
2. Can't pay a cancellation penalty higher than $50.
3. Must give consent, through a signature and a third-party verification process, before they're signed up for a door-to-door offer.
Should I participate in "Choices For You"?
There's no guarantee you'll save money. In fact, CUB's
Gas Market Monitor shows that consumers are much more likely to lose money with unregulated gas companies. Remember, "Choices for You" is optional. If you don't sign up, you will continue to be served by Peoples Energy or North Shore Gas, with rates regulated by the ICC. If you find "Choices for You" too confusing or too risky, you're not alone.