Natural gas buyers say that while having a relationship with their supplier remains important, the exit of yesteryear’s hand-shake agreement and the entrance of trading exchange anonymity and significant personnel turnover have reduced the emphasis on knowing your supplier before entering into a deal.

Speaking at Interchange Energy Group’s LDC Forum in Chicago on Wednesday, a panel of gas buyers consisting of utilities and an end-user agreed that in today’s gas market, factors such as reliability of supply and price are more important to a deal than the relationship with the supplier.

Mark Bergeron, senior vice president of utility services for Dallas-based Atmos Energy, said price, reliability and diversity of supply and relationships are all points of focus. “All of them are important…but if you look at [Hurricane] Katrina and the volatility of supply today, reliability and diversity of that supply” is key.

Speaking from an end-user perspective, Terry Taschwer, commercial manager of paper and packaging giant Pratt Industries, said that while all aspect of purchasing are important — price trumps all. “With our company, price is one of the things we look at as one of the very first things,” Taschwer told the audience. “The price of natural gas in our company as a percentage of the finished product has jumped tremendously.”

Taschwer said his company’s portfolio is the second most important focus, followed by the reliability of delivery and finally the relationship with the supplier. However, he noted that relationships still count for something. “During [Hurricane] Katrina we had some problems getting our gas, but through some very good relationships [we were able to do some things] so that none of our operations dropped and all of our contracts were honored.”

Dave Clare, director PG&E Gas Procurement for California-based Pacific Gas & Electric, said relationships with suppliers aren’t what they used to be. “I’ve been in this business for 20 years and the relationship aspect has changed over those years,” he said. “It’s probably not as important to some gas buyers. I grew up in a time when relationships were critical…and you knew who you were buying from. Now there is so much turnover and so many trading platforms.” He noted that in Canada, Pacific Gas & Electric buys a lot of its gas off of NGX, where “we don’t have a clue of who we are buying that gas from other than NGX, which is a trading platform.”

Saying that all of the factors in a deal make for “a total package,” Gary Bartlett, vice president of supply operations for Naperville, IL-based Nicor Gas Co., said reliability of supply stands by itself. “Making sure we have the supplies available to deliver to the marketplace is probably at the top of the list because we have to be able to deliver. We can’t have customers freezing during winter time. It gets cold here.”

Bartlett agreed with Clare that relationships in the industry are not what they used to be. Citing his 30-year industry history, Bartlett said, “There is a lot of gas that is traded that you don’t even know who you traded with. It makes it much more difficult. I think it is something we have lost in this industry…and I think it is a little unfortunate.”

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