Most people associate energy deregulation with electric choice, but the deregulation bill the Legislature passed two years ago today applies also to natural gas.

Even so, it wasn't until recent weeks, when gas-heat customers started seeing what it cost to keep their homes cozy during a frigid December, that gas received much attention.

With both commodities, we were promised lower rates, and that is happening with electric service. By mid-2002, rates will drop as much as 14.8 percent below their level 18 months ago.

But after being spoiled by a string of mild winters and low gas bills, consumers are getting sticker shock this year. Worst of all, there's not a whole lot to do except turn the thermostat down, wear an extra sweater, and hope the groundhog doesn't get frightened into six more weeks of winter when he emerges on Friday.

"My wife and I were appalled," said John Capicchioni, whose December gas bill was double the November bill. "That's a huge amount to jump."

Capicchioni thought the bill was so high because Public Service Electric and Gas Co. had not read the meters at his Allendale house, and had overestimated usage. The error, he figured, would be corrected when his meter was read this month.

That's partially true, because the utility grossly overestimated usage on Capicchioni's swimming pool meter. But the sky-high December bills he and others received are also a preview of what is coming as deregulation takes hold.

Unfortunately, many consumers are tuned out to deregulation and still don't understand how the system works, even halfway through a three-year, $30 million state-run education program.

For a fraction of that, I'll walk you through some basics: Gas bills soared last month because the cost of the raw material (natural gas) went up as demand exceeded supply, and usage increased because it was unusually cold.

Wholesale gas prices actually started rising long before this winter, forcing the Board of Public Utilities in October to approve an immediate 16 percent rate increase, plus five additional monthly increases of 2 percent each.

That means the rate for December was 18 percent higher than two months earlier, and when all the monthly adjustments are made, the rate could be 28 percent higher by April.

Incidentally, while utilities make money on the electricity itself, as well as on its delivery to your home, they make nothing on the gas. Their profit comes from bringing it into your home.

By law, the utility's cost to purchase gas gets passed along to customers. That means with wholesale prices remaining high, the rate increases granted by the BPU may not be enough to cover PSE&G's costs, and gas-heat customers could be paying for their winter comfort in the middle of the summer.

This wasn't supposed to happen. One of the ads in the state campaign last year boasted that with deregulation, customer choice of natural gas suppliers would lead to competition, resulting in "possibly . . . lower natural gas prices and enhanced products and services."

But don't bother shopping around for a better deal; you won't find one, at least until wholesale gas prices fall.

Although more than 2 percent of residential electric customers have switched suppliers, a mere handful have picked an outside source for gas. The BPU doesn't even bother to track the numbers.

Because of the BPU-imposed rate cap, even after the increases, "the prices they can offer are not even close to what we can offer," said Kathy Ellis, a PSE&G spokeswoman. "We have not seen any activity in recent months."

But when the phase-in period ends in 2003, rates, now set by the BPU, will be based on market conditions. If we operated under those rules now, December gas bills would have been even higher than they were.

The lack of marketers hasn't slowed the advertising blitz that started in July 1999 under a three-year, $30 million contract the BPU awarded to a Mount Laurel-based public relations company.

"We need to stay on message," said Fred Abbate, executive director of the New Jersey Utilities Association.

"We need to explain to consumers that the law gives them a choice, that they have certain kinds of rights, and they are protected," said Abbate, who is chairman of the Utility Education Committee, which works with the BPU in developing the campaign.

I don't disagree; educating consumers is important. But the current emphasis on ads telling consumers they are protected against slamming -- having their suppliers switched without permission -- seem to be a waste of money when there is virtually no one attempting to solicit either electric or gas customers.

Abbate defends the ads, even though slamming is "not as big an issue as it would be if we had more people in the market. It is one of several messages we have been trying to get out, that you have protections. It's not the only thing we've been saying."

But I agree with some industry officials who think the slamming message, and much of the rest of the ad campaign, should be shelved until there is an active market.

And don't forget: Ratepayers may wind up footing the bill for the ads. Utility companies are paying the bills now, but they will be allowed to pass on the costs to ratepayers if the BPU determines that the campaign was effective.

Considering that the BPU has the final say on the ads, it would be hard for the commissioners to challenge their effectiveness.