Braving a Switch In Utility Service
Energy Choice Offers Savings, Renewable Sources
Friday, April 25, 2008; Page D01
It's spring. The wool socks are back in the drawer. The shorts have yet to appear. It's time to sit back, take a deep breath and look at your energy costs, while the thermostat is holding steady and your blood pressure isn't rising in lockstep with your utility bills.
Although consumers might not know it, residents in Maryland and the District can buy electricity and natural gas from someone other than a traditional utility. Virginia residents can do so for natural gas. The old utility still delivers the power and in most cases sends the bill, even if you buy power from someone else.
Energy choice, as the practice is called, is the product of deregulation of the electricity and natural gas markets that jurisdictions across the country began embracing about a decade ago. The idea was that competition among electricity and gas providers would lower prices for consumers.
Deregulation hasn't caught on the way its supporters had hoped it would. In Maryland, about 3 percent of eligible consumers buy electricity from an alternate supplier, according to the Maryland Public Service Commission, and about 1 percent of eligible Pepco customers in the District do, according to the D.C. Public Service Commission. More consumers shop around for natural gas. Washington Gas reports that 9 percent of its residential customers in the District, 15 percent in Maryland and 11 percent in Virginia use alternate suppliers.
There are a host of reasons most people opt for the default choice known as the standard offer service. There's the time required to do research, the potential of having to switch suppliers once or even twice a year and the difficulty in getting comparative rate information.
Deregulation has disappointed in other ways, too. In Maryland, electricity prices rose sharply in recent years after rate freezes initially imposed to ease the transition to a competitive market expired and demand for energy grew. The experience was bad enough that consumer advocates and some Maryland officials are arguing that the state should follow Virginia, which ended its experiment with electricity deregulation last year. Power companies contend re-regulation is no panacea. Although it could stabilize their customers' costs, it might not lower them.
For now, there are tens of thousands of consumers who think either the potential savings or the ability to get more of their power from renewable energy sources make shopping for alternate suppliers worthwhile.
Keith Snail of Silver Spring decided to give it a try four years ago after a series of particularly egregious winter electricity bills, with some approaching $300. He'd received a marketing flyer from Washington Gas Energy Services, a subsidiary of WGL Holdings, which sells electricity and natural gas. He discovered WGES's electricity rates were cheaper than Pepco's and signed up for a one-year contract at a fixed rate. He estimated that he saved about $400 a year.
Environmentally conscious consumers, by contrast, get a different kind of payoff. Shopping for an alternate supplier gives them more choices when it comes to renewable energy. But they will likely cost more, too. For instance, 100 percent wind-generated electricity will cost a District resident about 15 cents a kilowatt hour, compared with about 9 cents a kilowatt hour for the standard offer service, a small portion of which also comes from renewable sources.
Whether you want to save the kind of green that grows on trees or the kind that sits in your wallet, you may have to suffer a few headaches as a do-it-yourself energy buyer.
Before renewing with WGES three years ago, Snail wanted to look at other offers, which required calling various suppliers for information.
"It was very time-consuming to get quotes," he said, "and in the end I just threw my hands up and did not switch electricity vendors."
In his search for rate information this year, Snail had help from a chart the Maryland Office of the People's Counsel compiles monthly and posts on its Web site. In studying the rates, however, he saw that Pepco's rates were now lower than WGES's, and he plans to switch back. By doing so, he estimated he may be able to raise his annual savings to $600.
Snail said after seeing Pepco's new rate, he got to thinking maybe he should have switched back sooner.
"Maybe I didn't try hard enough to get the information I needed," he said.
The D.C. and Maryland public service commissions, the Virginia State Corporation Commission and utilities such as Pepco and Washington Gas offer guides on how to shop for the best deal.
The key, as Snail found, is information. Start by figuring out how much energy you use so you'll know how much a supplier's offer will cost you each month. Next, find out how much the standard offer service costs. Utilities can provide you with a "price to compare" to use as a baseline.
You can get a list of licensed suppliers in your service area from your electric and gas utilities as well as your state corporation commission or, if you live in Virginia, the state office of corporations. You will have to call to find out which ones are offering service in your area. Just because they're licensed doesn't mean they're active in your market.
After narrowing the possible suppliers, compare their rates. In Maryland, the Office of the People's Counsel publishes a price comparison chart each month. Always call the supplier to verify the rate.
Before settling on a supplier, find out whether the rate is fixed or will fluctuate with wholesale prices. Ask what other charges or fees are included in the rate. Also find out how long the contract is for and whether there is a fee to enroll or to cancel service.
In some cases, suppliers have dropped customers before their contract has ended because they were not able to make money selling electricity at the promised rate. If this happens, complain to the supplier and the public service commission, which may be able to revoke or suspend the supplier's license.
Despite the few glitches he's experienced, Snail said now that he has an easier way to compare rates, he's going to keep looking for the best deal.
"If I can save money by switching," he said, "I'll do it in a heartbeat."