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Retail Toxic Waste?

|Includes: SCANA Corporation (SCG)

I get my natural gas from PSNC Energy, which is a subsidiary of SCANA (NYSE:SCG).  This month in my gas bill I got an offer of a Budget Billing Plan, which promised, for $117.00, to "spread my payments out evenly over the course of the year."

This, to me, sounds suspiciously like an interest rate swap, trading a variable cost for a fixed one.  In what way is this not a retail derivative?  Does that make it bad?  As promised, it might help me and other customers budget more easily throughout the year.

On the other hand, there may be significant fees and financing expenses buried in there.  Certainly, from an administrative point of view, it's more expensive to the vendor, though it does give them a more stable revenue stream. It may well be that there is solid enough regulation around this kind of thing to prevent egregious mark-ups.  But in the current regulatory and public finance environment, do I trust that the regulators will be adequately staffed to monitor and enforce the regulations on the books?

Lastly, does it do me a service if my actual expenses are hidden from me?  Is there a moral hazard there?  Does it encourage me to overconsume?

I'm not going to do it, because the seasonal fluctuations aren't material to our household, and I don't have time to do due diligence on the transparency issues.  This could be quite a valuable service, but it is, at the end of the day, a retail derivative. I'm not at alll sure that makes it bad.

Disclosure: Index funds only