Helena Independent Record
Big Sky Gas: A new player in the natural gas game
Residents of the Helena area have a choice in their natural gas providers with a new company looking to sway customers from utility giants by focusing on customer service and lower rates, the company’s CEO said.
Big Sky Gas opened in April with a marketing campaign touting 90’s era deregulation of natural gas providers as a way to save customers money. By operating with a smaller staff and buying from more markets, Big Sky can provide lower gas rates than NorthWestern Energy, which serves most of Montana, and Energy West Montana, serving the Great Falls area, said CEO Chad Bachmeier.
While some Montanans associate the 1997 deregulation of utilities with higher energy costs, Bachmeier touted the upside in competition for natural gas customers.
In 2007, the Legislature reversed course by regulating the electrical side of utilities for residential and small commercial customers. The legislation did not include regulation for residential and commercial natural gas.
“I think deregulation is a good thing because it creates a choice for the consumer, and with deregulation laws it lets me come in and offer a product for less,” he said. “I’ve worked with a lot of people in 32 other states that have thrived in deregulated markets.”
Big Sky currently services more than 1,000 customers in the Helena area with goals of offering service across the state, he said. Since opening, his company has saved customers around 15 percent on their natural gas bills, Bachmeier added.
Big Sky operates by buying gas on the open market, employing consultants to recommend when and where to buy, and then selling the gas to consumers. The company owns no infrastructure, meaning that all current servicing and delivery still comes from NorthWestern, and customers receive two bills every month.
The 15 percent savings average all months since opening, and when dealing with a start-up company and gas markets, those rates have fluctuated.
According to the companies’ websites, while Big Sky’s prices sat below NorthWestern during the warmer months, they peaked higher in December. Big Sky charged customers 54 cents per therm compared to 42.5 cents per therm to NorthWestern customers. By January, Big Sky was down to 39 cents per therm while NorthWestern remained at 42.5 cents per therm.
Bachmeier attributes the spike to bringing more customers online as a growing company.
“We added a lot of customers in the November and December cycle and had to buy gas at the higher rate and didn’t have the storage allocated for it,” he said. “I don’t foresee that happening anymore, but it’s something you see as you grow. We’re still an infant as a company, but we have a lot of years of experience with our consultants.”
The average residential NorthWestern customer uses 100 therms of natural gas per month.
The Public Service Commission regulates electric rates, and while it does license and provided rules for natural gas providers, it does not regulate natural gas rates, said PSC Administrator Kate Whitney.
Legislation passed in 1997 allowed utilities to open up their markets to supplier choice, and NorthWestern and Montana Energy West chose to “voluntarily” do so, she said.
“There are other gas suppliers whose licenses enable them to serve residential customers, but Big Sky Gas is the only one that is actually doing it,” Whitney said.
The decision to open markets up occurred under Montana Power and took place under considerable pressure from other gas suppliers after it had sold most of its wells and was purchasing gas on the open market, said NorthWestern spokesman Butch Larcombe. Purchasing on the open market left Montana Power in the same position as other suppliers to offer gas at similar prices, he said.
NorthWestern still buys gas from suppliers, but has since purchased significant numbers of gas wells and systems, which allows it to offer fair and stable prices, Larcombe said.
“Buying natural gas on the short-term market was slightly cheaper during the warmer months, but that situation has changed,” he said. “We try to limit our exposure to markets with long-term contracts and the wells we own. That allows a good stable supply at a price that’s good for our customers in the long run.”
Despite trying to court its customers, Bachmeier describes the relationship between Big Sky and NorthWestern as a “partnership.” As the first company to take advantage of deregulation, that has left Big Sky as a trailblazer that works with the utilities to put procedures in place, he said.
Looking to the future, Big Sky hopes to offer customers a fixed-rate bill that averages use for the year and to continue building its customer base, as well as coming online with Energy West, Bachmeier said.
“I’m really excited about 2015 and where we’re going to go. I think we’ll be able to help Montana consumers by giving them a choice,” he said. “Our goal is to save the consumers money.”