Gas bills and contract ethics

calculator and bills

Image courtesy of moggara12 / FreeDigitalPhotos.net

Earlier this week, we had a huge burden lifted from our shoulders.  We received our first gas bill since the expiration of our contract with an energy supplier.  We are now paying the fair market rate for our natural gas which is about a quarter of the inflated rate we’ve been paying for the last five years.  I only regret not taking action sooner instead of wasting money.  We could have been a little further ahead

Deregulation

I should back up a little here and explain that here in Ontario, our natural gas market was deregulated back in the eighties.  That means that while the local gas company is still responsible for delivery, the consumer has the option of purchasing the commodity from a marketer.

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We gambled and won

Ten years ago, we signed a five year contract with an energy marketer.  Their rate was higher than the current utility’s rate, but the rate was guaranteed for the life of the five year contract.  By halfway through the contract we were paying substantially less than the current utility’s rate.

We gambled and lost

Five years ago,  we signed a new contract with the same marketer.  The price was much higher– about double what we had been paying.  But because we had done so well on the previous contract, we figured it was a no-brainer.  After all, the price of natural gas would only go up, right?

Wrong!

In fact, about three years ago, I went to the utility’s website to see what the current prices were, expecting to feel good about how much I was saving.  What I found was the price had dropped and we were now paying double the current rates.

We should have taken the salesman’s advice

When we signed the new contract, the salesman let us in on a little secret.  There was a loophole to get out of the contract should we ever decide to use it.  We wrestled with the ethical implications a couple of years ago as we watched money flying out the window.  And I made a couple of phone calls to see if it was indeed possible to get out of the contract.

It was.

The local utility seemed to frown on it, which I found odd since they were going to get more money from us.  The marketer actually walked us through the steps we needed to take if we wanted out.  Unfortunately, we never took advantage and simply waited for the contract run out.

Glad I read the fine print

A few months ago, we received the offer to renew our contract again.  I almost tossed it aside without reading it, since we had no intentions of re-signing.  But for some reason I decided to read the document, which serves as an important lesson.  The contract would have auto-renewed for our convenience at a new variable rate for a minimum of one year if we did not sign a five year deal or indicate that we were choosing not to sign at all.  Had I just ignored the offer, we would have been stuck in another contract.  And it would have been costly because the price of natural gas has fallen even more since then.

The loophole

Yes, there may be a way out of an expensive long-term contract.  According to the salseman five years ago, all we had to do was take the bill out of my name and put it in my wife’s name.  Simple.  So simple that I am questioning why we didn’t do it when we first looked into it a few years ago.  Both the utility bill and the energy supplier’s contract were solely in my name.  Here are the steps we needed to take that would have saved us a couple thousand dollars:

  1. Contact local utility and cancel the account for our address that was in my name.
  2. Wife would have to contact local utility to open account for our address in her name.  Because she was a new customer, she would have had to pay a rather large deposit. Plus there would be the usual connection charges for opening the new account.
  3. Submit to the marketer proof that I was no longer responsible for the utility bill at that address (ie the first bill in my wife’s name).

The process could have been completed in a couple of months. Whether it was laziness, procrastination, or a simple case of only thinking about it when the bill came in and forgetting about it the other 29 days of the month,  not taking advantage of the loophole cost us some serious coin.

A question of ethics

Is it okay to get out of a contract that you signed in good faith when its terms no longer benefit you?  The only reason for changing the name on the gas bill would be to get out of the contract.  We were not splitting up.  Our job situations had not changed.  The money to pay the bill would still come out of the same joint bank account.  Did we end up doing the right thing by riding out the contract, or were we stupid for throwing money away when we had a way out?

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