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  1. #1
    Senior Member colesy's Avatar
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    Question 3rd Party Hydro/Gas Comapnies

    It seems I have at least 1 person every week knocking at my door from different companies trying to switch my natural gas provider over, or my hydro provider, or both at the same time.. I don't really know a whole lot about them. What they have to say sounds amazing, but I never bite because I am always worried what I am getting into. Basically I am just going on the old saying, if it's too good to be true, it probably is. I have also had a few people tell me to tell them you are not interested.. I haven't really been able to find out why I shouldn't switch though. Are these companies truely legit? Are they going to save money over a long period of time? They keep saying that if I don't switch from who I am with now, I could be stuck with higher rates.

    My current compies are Hydro One, and Union Gas... If anyone has an opinion on the subject, or actually has facts on the best company to use, please post. I would love to figure out if I should switch or not. Thanks!

  2. #2
    Senior Member Bram's Avatar
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    I use to tell them that I was the son of Hydro one Pres, or that the woman next door was looking to get a different provider.. :hysterica
    other than that i wasn't really listening to what they were saying
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  3. #3
    Senior Member bebitte70's Avatar
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    A year ago I was sort of in your situation. I've had 3 companies try to get me on a contract for natural gas. At the time, it was around 28 cents/m3.
    The best rate I got was 29.9 which I signed the contract for 5 years I'm locked at this rate. So it ended up being a good thing for me since the rates went up since.
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  4. #4
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    I signed up on the decreasing price plan, 30 cents first year, 29 second, 28 third...

    A guy knocked on my door recently saying it was starting at 43 now, I'm worried about the shock I am going to get after 5 years when my price doubles.

  5. #5
    Senior Member colesy's Avatar
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    hmm, maybe I should look into this then... what are the public rates right now?

  6. #6
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    As far the hydro goes the savings will not be that large unless you really use a ton of power. Keep in mind that they are selling a fixed rate on the power or gas only for what ever term they offer. Look at your bill. You will see that the actual product used is not that much or the bill. It is all the other stuff that they have been tacking over the last few years like "delivery" etc. your 3rd party discount will not affect those additional parts of your bill.
    Rob

  7. #7
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    These companies are in it to make money. They don't create new power, just re-sell what others are producing. Even leaving aside the 'extras' which OSD mentions (about 2/3 of my bill), I don't see how they will get enough price discount from the generating companies to give a major price discount and still make money. When I see them offering big discounts in rates, I get suspicious about when the other shoe will drop or what the fine print says. I dealt with one of the gas resellers over a service contract and was very unimpressed by the misleading information they gave me and their refusal to provide the service I had paid for.
    Nick

  8. #8
    Senior Member colesy's Avatar
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    Here is something I found that explains how these companies are able to do what they do.. It helped me understand everything a bit better.

    It's hard to believe that deregulation of natural gas in Ontario started in 1985 with an agreement between the Federal Government and Ontario allowing customers to purchase natural gas at market price rather than at the regulated price. The volume requirements were high and only large commercial users were able to actually exercise this option.

    In 1992 changes were made to the administration of direct purchase contracts by the local distribution companies that allowed unrelated parties to pool their volumes and purchase natural gas directly from a producer or from a natural gas marketer in Ontario. In 1993 the regulations changed again to allow pooling of residential customers with commercial and industrial customers effectively allowing any person or organization in Ontario to purchase natural gas from suppliers or marketers.

    In 1997 a new system of contracting and billing for natural gas was introduced. In a nutshell it was a transportation agreement that allowed natural gas marketers in Ontario to contract with their customers to provide gas and other services for multi-year terms. The payment was collected by the utility delivering the gas and then paid to the marketer. It meant that small volume customers had access to the same benefits as large volume customers.

    In 1998 Bill 35, the Energy Competition Act was passed and the Ontario Energy Board was created. The Board licenses retail gas marketers - those marketers who sell to residential customers. They also approve natural gas rates charged by utilities, pipeline construction, storage facilities, franchise agreements, and changes in corporate ownership.

  9. #9
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    Thanks for the background info Colsey. I understand the changes to the regulatory environment, etc. I just don't understand the economics.

    Hydro 1 is a bigger 'purchaser' of hydro than any of the resellers. They should be able to get just as good deal as the resellers. If I were setting up to sell you a five contract, I would want to make money on it. Hence, knowing that prices will be going up over the five years, I'd have to build that into the contract. I just don't understand how a reseller can sell for lower prices than Hydro 1 and still make any money (they can't be that much more efficient as businesses).
    Nick

  10. #10
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    Hydro1 may be getting the best price but keeping bigger profits.

    Another way I look at it is the reseller isn't making less than Hydro1, they just aren't making as much, they are all still making money. Hydro1 might lower their price if/when more people switch.

    Example: a can of coke sells for $1-1.25 a can from a vending machine, if I buy in volume I get 24 for $5.99 or $0.25 a can, if I sell for 0.75 cents a can I make $12 on the case. I'm still making money just not as much.

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