Commercial energy / Buyer guidance
Early termination of a gas contract: match the remaining seasonal quantities
Evaluate an early gas exit using remaining delivery volumes, settlement documentation and a winter-weighted example.
Start with what remains to be delivered
A gas contract signed for a heating season should be evaluated against the months still covered, not twelve identical monthly averages. Assemble the agreement, remaining supply schedule, actual units and proposed exit date. Determine whether an early exit affects commodity supply alone or also obligations connected to transportation, capacity or other separately contracted services.
Ohio's supplier questions explicitly include early cancellation. They are a useful question prompt, not a national commercial cancellation rule. The applicable agreement and current local requirements determine the account's treatment.
Request an auditable exit estimate
Ask the supplier to identify the termination clause, quantities remaining by delivery month, pricing inputs, credits, additional fees and estimate expiry. If a broker communicates the result, request the supplier's underlying written confirmation. Where transport services are involved, ask which agreements end with supply and which continue. A supplier switch is not automatically the cancellation of every associated service.
If the business is selling a facility, identify the contracting entity and proposed closing date. Ask whether an assignment or novation is available, whose consent is required and when release becomes effective. A buyer's willingness to use the same supplier does not by itself release the seller. Do not describe a facility closure or ownership change as an automatic fee waiver without the applicable written provision.
Worked example: the remaining winter dominates the comparison
Fictional remaining deliveries: November through March total 8,000 MMBtu; April through June total 1,000 MMBtu. Existing commodity price is $6.00/MMBtu. A proposed replacement is $5.60 for the winter quantities and $4.80 for the spring quantities. Both paths cover exactly the same 9,000 MMBtu and delivery months.
The existing commodity amount is 9,000 × $6.00 = $54,000. Replacement commodity is (8,000 × $5.60) + (1,000 × $4.80) = $49,600. Its volume-weighted rate is about $5.5111/MMBtu, not the simple average of $5.60 and $4.80. With an invented $5,000 exit settlement, the replacement path becomes $54,600, or $600 more before any other differences.
Using a $5.20 unweighted replacement rate would have understated replacement commodity cost by $2,800. This mistake can reverse a decision even before considering transportation, balancing, delivery or taxes. All prices and volumes are teaching inputs, not market offers, forecasts or achieved savings.
Resolve quantities and final adjustments
Keep an estimated-data flag beside any unsettled delivery month. Ask how corrected utility readings or final imbalance settlements affect the exit amount. Reconcile a deposit refund as the return of an existing asset, not an operating saving. Track credits against the final invoice and avoid counting a settlement component twice under different descriptions.
If the replacement term extends beyond the old expiry, show that extension as a separate commitment. Use the gas offer comparison guide for unit and scope checks before approving a switch.
Sources and limits
The Ohio regulator's question list supports asking about cancellation; it supplies none of the invented settlement terms above. This comparison cannot establish enforceability, eligibility for release or a supplier's actual exit calculation.