If Northeast Utilities and UIL Holdings convince Connecticut to support a large build-out of the natural gas infrastructure, heating oil companies could lose a lot of customers.
To compensate for the customers switching away from fuel oil, the companies already have moved into other realms of the energy sector and want the General Assembly to open up even more, especially if the state government ends up subsidizing the competing natural gas industry.
“It is wise to think that things change and usually do rather quickly,” said Gene Guilford, president of the Independent Connecticut Petroleum Association. “We want to have an open, transparent free energy marketplace.”
When the General Assembly deregulated the electricity industry in 1998, many heating oil companies found new life as different types of energy providers. Under the new laws, companies flourished as competitive electric suppliers, offering electricity to customers at generation prices lower than utility-company rates.
Heating oil companies have found similar streams of revenue as natural gas suppliers, Guilford said. Under the decoupling of the industry, competitive natural gas suppliers can offer alternatives to utility rates for commercial and industrial customers, although not for residential customers.
The heating oil industry is urging the General Assembly to allow them to enter the competitive natural gas market for residential customers as well. Guilford said if Yankee Gas, Southern Connecticut Gas and Connecticut Natural Gas want state assistance in expanding the natural gas infrastructure, then the utilities should consent to opening up the competitive natural gas market.
“Then the utilities would face increased competition,” Guilford said.
Even without increased access to the energy market, heating oil companies are finding their own ways to survive in a world that sees natural gas as a cheaper and cleaner alternative.
F.F. Hitchcock Oil Co. of Cheshire offers other services such as plumbing, heating and air conditioning work.
“Utilities have an unfair advantage in any respects,” said John Bowman, co-owner of F.F. Hitchcock. “Their profits are guaranteed by our government.”
The Cheshire company actually started off in the 1870s as a plumbing and heating provider and decided to move into the heating oil market in the past five years.
Bowman said F.F. Hitchcock saw an opening in the heating oil market to offer discount pricing while still providing full-scale service. The company now delivers more than 1 million gallons of heating oil annually.
Still, with natural gas becoming more prevalent throughout the state, the number of potential customers for heating oil is dwindling.
“In every one of our communities, we have seen natural gas lines come in,” Bowman said. “When it comes time for people to replace their old system, this is a viable option for them.”
State Sen. John Fonfara (D-Hartford), co-chair of the legislature’s Energy & Technology Committee, said he will work toward ensuring any natural gas expansion won’t push heating oil companies out of the Connecticut energy market completely.
“Many of them are family-oriented companies. They have been valuable parts of energy in this state for generations,” Fonfara said. “I want to see whatever movement we make toward natural gas expansion be done in a way … so they have a place in this new world.”
