You may have noticed that gas prices run rather high these days…though perhaps “high” isn’t a strong enough term. Some people prefer “outrageous” instead. If you live in a residence served by both electricity and gas, you’ll see that your gas costs about 1.6 times more than your electric. For example, with British Gas Standard or Fixed 2014 rates, you’ll expect to pay an average of £73 for gas and £45 for electric. That’s typical in the UK.
But for some countries, it’s very much the reverse. Consider America. In many of the United States, a monthly gas bill of more than $75 (roughly £45) would be a cause for great alarm, while electric bills of twice that amount are considered ordinary. In fact, gas adverts in the USA tout the lower cost of gas as one of its best advantages over electric!
Now, let’s be careful here: as you may or may not know, Americans call petrol “gas”, short for “gasoline”, and refer to the stuff in the household pipes by its full name of natural gas. Do keep that in mind next time you’re comparing gas bills with an American!
The Definition and the Deed
You may be wondering what all this has to do with independent gas transporters, but fear not, we’re getting there. First let’s define what these “IGTs” really are. The name conjures an image of fellows in long lorries driving from town to town selling gas, but it’s simpler than that.
Most gas mains belong to the National Grid, the free-market result of gas transmission privatisation in 1989. But some mains and pipeline networks lie outside its jurisdiction. Someone has to serve those networks, so small independent providers handle them. Think of them as taking care of the people round the edges of the Grid.
As of this writing (mid-November 2013), there are seven independent gas transporters. They include:
British Gas Pipelines
Energetics
ES Pipelines
Fulcrum Pipelines
GTC Pipelines
Independent Pipelines
SSE Pipelines
Like all other UK energy providers, IGTs are overseen by the Office of Gas and Electricity Markets, or Ofgem.
An estimated one million British households get their gas from IGTs. But they no longer serve just the edges of the market; they’ve been making inroads elsewhere as the UK grows. How? By making special deals with new home contractors and subdivision constructors. They charge these companies less for gas-line installation than National Grid contractors do.
But they get their own back, because forever after, the gas costs for those properties carry an IGT surcharge.
How’s That Work?
Here’s what happens: When independent gas transporters lay the gas pipes for a new house, they own those pipes. So they can charge what they like to Southern Energy or E.ON or whomever for the privilege of supplying gas through those lines. IGTs do not produce or supply gas of their own; they just add a sort of toll for using their pipes. It’s a right venerable practice, if you think about it. After all, we’ve all used toll roads. And fact is, they do own the pipes, so why not?
Here’s the problem: you may have the lack of savings passed on to you.
If you’re served by an IGT line, you’re paying both the National Grid and your IGT for the gas passing through your household pipes. That’s the only difference between National Grid gas and IGT gas; IGT costs more. The extra price isn’t high. In fact, for some time most of the Big Six energy companies, save E.ON and nPower, have absorbed the extra charges without asking you to pay them. But smaller companies like OVO Energy and First Energy may not, thus bumping your energy costs slightly.
Furthermore, given the upward zooming costs of energy, this arrangement may not last forever. Most of the Big Six have already announced rate hikes of an average of 9.1% starting in late November and early December 2013 anyway.
That’s why you should care about independent gas transporters. Some people may tell you it’s not a big deal and not to worry, but here’s the thing: it can goof up your calculations if you decide to switch to another company, because IGT tariffs may not be included in your gas comparison quotes. And even a drop in the bucket helps in these cost-conscious times.
So: If you’re thinking about moving house, especially to a new estate, find out whether they use an IGT before you go.
Floyd Largent has been lookong into independent gas transporters to see if there are better deals available through them.