A number of residents has asked about the recent natural gas aggregation pricing notice which eligible customers recently received in the mail. The mailing contained information pertaining to the city’s natural gas aggregation program.

One item of information contained in the mailing was the negotiated rate of $0.3898 per hundred cubic feet (CCF) of natural gas. The mailing also contained information on how to opt out of the program.

Those who have spoken to me have expressed concern that the rate negotiated for the city was higher than the Standard Choice Offer (SCO) rate billed by Vectren the month the notice was mailed. That is true.

Consumers need to understand that the rate negotiated by the city is a 24-month fixed rate. The Vectern SCO rate fluctuates each month, depending upon the supply of natural gas and the market demand.

Fortunately, we have enjoyed a milder than normal winter. While this is good news for those of us who don’t enjoy shoveling snow, the mild winter has led to weaker demand for natural gas and instability in market pricing.

While natural gas aggregation will not result in the “slam dunk” price we negotiated for electricity, we felt that the unpredictability of the market made offering the certainty of a 24-month fixed rate an attractive enough option to offer the choice to our residents.

Those who prefer to “roll the dice” with a variable rate can remain on the SCO rate offered by Vectren. Our research indicated that nationwide, suppliers were shutting down natural gas wells in an attempt to drive up the price. While the variable rate may currently be below our negotiated rate, there is certainly no reason to believe that it will remain below our negotiated rate.

For example, the polar vortex experienced last year quickly altered the demand for natural gas, driving the price of natural gas up more than five times its normal rate. If consumers elect to remain on the SCO rate, they remain exposed to the prospect of wild weather’s causing energy prices to spike. For example, wholesale electricity prices reached $5,000 per megawatt hour for the first time ever during the polar vortex.

The mayors from the communities involved in natural gas aggregation met and discussed the wisdom of offering a variable (SCO) rate, and we determined that offering stable pricing in a time of uncertainty was our priority. If residents prefer the stability of a fixed rate for a fixed period of time, this program offers them that choice at a rate far better than is otherwise available.

The community’s role in both natural gas and electric aggregation is to simply facilitate and coordinate a “bid” which allows suppliers to “compete for and win” thousands of customers at one time. While aggregation typically results in lower utility rates, there is certainly no guarantee that the lowest rate available would be achieved, as we have no way to predict the future.

The city has no financial interest in the program. Similarly, the supplier and the consultant chosen to facilitate the bidding process have not cut any special deals with the city.

The expertise to manage and maintain an aggregation program is lacking in nearly every community. It is expertise that no one in Sidney’s city hall possesses, and we have no desire to hire someone who does possess that expertise. The commission rate our consultant will earn is at or below industry averages.

Affordable Gas and Electric LLC (AGE), the consultant chosen to facilitate the aggregation programs, was put through an exhaustive vetting process. That process included interviews with multiple consultants who competed to win the opportunity to serve our residents. The mayors of surrounding villages were invited to participate, and the schedules of former Fort Loramie Mayor Phil Eilerman and Russia Mayor Terry Daughtery allowed them to join Sidney’s city council for the interview process.

As I have stated before, we looked at aggregation as a real opportunity for the residents of our community to potentially see significant utility savings, with no downside or risk. As elected representatives, it was council’s belief that by spending a bit of time evaluating aggregation, we should offer our residents this opportunity.

I want to emphasize that Sidney consumers can leave the program at any time without penalty if they can find a better utility rate elsewhere. That is different from most any other program, as most have termination fees that are high enough to prevent customers from leaving prior to the end of their contract.

Council felt that it was important for residents to have this freedom, and built those requirements into our local program. Information on how to opt-out of the city’s program was included with the recent notices.

For residents who pursued lower rates on their own and are currently under contract, there is likely a severance clause that would make it financially difficult for you to leave your current supplier. Once your current contract period is over, you are free to join the city’s aggregate. Of course, you could choose not to do so — the choice is clearly your own.

Aggregation is clearly about providing choice. Residents are free to choose the city’s program with a fixed rate for a 24-month period, negotiate pricing on their own or stay on the SCO rate billed by Vectren. No one is forcing people to do anything they don’t want to do.

As I told an upset resident who phoned a couple of days ago who did not want to participate in the electric aggregate: “Simply fill out the card and mail it in. No one is forcing you to participate in this program.”

Those wishing to “opt-out” are also welcome to call Constellation directly. That toll-free number is 844-275-0797, and you will be connected to the city of Sidney’s natural gas aggregation operator.

For those who wish to take advantage of aggregation, you don’t need to do anything. Under state law, the process is automatic. Your invoice will continue to come from Vectren. You will continue to call Vectren for any problems you may experience with natural gas delivery.

For those residents and small businesses who are currently under contract with another supplier and as a result, not eligible to join the natural gas aggregate now, you will have the option of joining the aggregate when your current contract expires. There is no deadline to join the natural gas aggregate.

If you have questions about aggregation or any other matter, do not hesitate to contact your local council member. Of course, you are also welcome to contact me.