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Do Natural Gas Coops Exist?

The price of natural gas is projected to jump about 14 percent this year, but co-op savings are available in certain parts of the country. In 1992, the Federal Energy Regulatory Commission (FERC) issued Order #636, which required "unbundling" of natural gas. That means pipelines must separate their transportation and sales services. According to NaturalGas.org, "The Order gives all natural gas sellers equal footing in moving natural gas from the wellhead to the end user or local distribution companies."

Many states are still in the implementation phase, but a few co-ops have started offering gas in states where gas is fully deregulated. (As of December 2007, these include only the District of Columbia, New Jersey, New York, and Pennsylvania).

The NYPIRG Fuel Buyers group is a large co-op that offers savings of about 7 to 15 percent for its natural gas members, according to its website. As with fuel oil co-ops, the co-op negotiates discounted prices on behalf of members.

"In New York State, any third-party natural gas provider is referred to as an 'ESCO,' or energy service company," explains Michael O.Connor of NYPIRG. "They agree to supply our members at a discounted rate, and we bring them new customers." But with de-regulated gas, customers get a split bill -- part for delivery and part for the gas itself. To simplify things, customers usually receive a bill on joint letterhead in a single envelope. "It used to be that about half of a customer's single bill from the gas utility was for delivery and half was for the actual gas," O.Connor says. "But recently the commodity price has increased rapidly." He notes that about half the ESCOs in New York are less than two years old.

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