Not all of Ohio’s shale gas is going to be shipped out of state or used to make plastics. Some Ohio consumers are going to be using it to heat their homes.
Not this winter, but next. And it will cost significantly less – potentially saving homeowners and small businesses $100 a year.
In what may be the largest “buy local” campaign ever, the Northeast Ohio Public Energy Council, or NOPEC, this week signed an agreement with a new supplier that emphasizes buying Ohio gas over interstate gas.
The deal means more than 270,000 households and small businesses for whom NOPEC negotiates a price for gas will see rates at a deep discount to gas coming from distant states.
“We think we are the first to look at the Ohio market in a consistent way, a way that we hope will change the general gas paradigm,” Chuck Keiper, NOPEC executive director, said in an interview.
Joe Migliorini, chairman of NOPEC’s governing board, summed it up this way:
“We’ve all heard and read about Ohio’s extensive shale gas deposits. NOPEC expects to purchase a large amount of Ohio natural gas at a significant savings, which will be contractually passed along to our customers.”
NOPEC’s new wholesale supplier is NextEra Energy Services, Ohio LLC, a division of Florida-based NextEra Energy, which also owns Florida Power and Light. NextEra was one of several companies competing to supply NOPEC customers
NextEra and NOPEC have a six-year contact that begins in April 2014. The current contract with Dominion Energy Solutions runs through March.
Because NextEra has agreed to buy as much Ohio gas as possible, said Keiper, most of the long-distance pipeline charges will be eliminated.
Initially, the NOPEC price to consumers should drop by 50 cents to 60 cents per 1,000 cubic feet, he said, or 5 cents to 6 cents per 100 cubic feet.
And that price cut would be on a rate fixed for several months, just as NOPEC currently does, working with Dominion Energy Solutions.
The NOPEC/Dominion Energy Solutions prices have been competitive with those of other marketers, but not always the lowest.
“Our prices have been in the bottom 10 percent consistently,” said Keiper, adding NOPEC never intended to always be the lowest, but instead to level prices out, and reduce the risk of price spikes.
But by relying on Ohio gas, NOPEC could wind up lower than many, if not most, other suppliers.
“I expect we will be in the short term,” said Keiper, though he expects other suppliers to also try to purchase gas locally.
But NOPEC intends to remain the lowest price among the monthly variable rates.
For the past several years as shale gas production has produced a surplus of supply, the monthly variable rate offered through Dominion East Ohio and Columbia Gas of Ohio has been the least expensive, compared with prices offered by independent suppliers.
But not as low as the NOPEC monthly variable, which has always been 2 cents per Mcf lower than the utility Standard Choice Offer.
That will continue with NextEra, said Keiper.
Most NOPEC customers, however, have opted for the fixed rate anyway, he said. And that fixed rate will be lower that it has been and possibly lower than the rates offered by most of the competition.
“Ohio should enjoy the benefit and prosperity that comes with the gas production,” said Keiper.