Choosing an electricity or gas provider could seem complicated. Here are a few basics that should help:
Q: What are people talking about when they talk about utility deregulation?
A: They're talking about allowing consumers to shop for their suppliers of natural gas or electric power. The utility industry is divided into three parts: producing the commodity (electric power generation or natural gas production), transmitting it and distributing it locally to homes or businesses. It's the commodity part of the chain that's being opened up to competition.
Many Washington area customers may already choose a natural gas supplier other than their regular utility, and soon they will also be allowed to choose a supplier of electricity.
Q: Does this mean I won't have to deal with my local utility anymore?
A: Not quite. Your local utility will still transmit natural gas or electricity to your house or business, even if you choose another supplier. The utility becomes the equivalent of a UPS truck, delivering goods you've ordered from elsewhere.
Q: I'm confused and don't want to deal with it. Do I have to choose?
A: No, you can do nothing and continue to receive natural gas or electricity from your utility as in the past.
Q: Why should I choose? What's in it for me?
A: Unless you are a major energy user, what you save on the price of natural gas or electricity itself by shopping around may not amount to much. But companies may offer other goods or services you find attractive--for instance, energy-management services to help you reduce consumption or "green power" produced by renewable resources that don't emit carbon or other emissions.
Q: Can I get together with other buyers to have more clout in the market?
A: Some states allow towns and cities to buy power on behalf of their residents to give residential customers more leverage in the market. In some states, such as Virginia, residents have to "opt in"--or affirmatively choose to be part of such a program. Consumer advocates say that's designed to make it more difficult.
In other states, such as Massachusetts, the municipality is authorized to buy on behalf of its residents unless they opt out. Many states also allow private organizations such as trade associations to aggregate users and shop for a better deal.
Q: If I switch, who's in charge of repairing power outages after a storm?
A: If the lines that are damaged are the utility company's lines on your street or into your home, the utility will still be responsible.
Q: How can I compare rates?
A: Electricity is measured in kilowatts, such as kilowatts used per hour, and natural gas is measured in therms. One way is to compare price per kilowatt-hour or therm. Your monthly bill lists these charges.
Q: What kind of questions should I ask someone who wants to sell me natural gas or electricity?
A: Ask about the key terms of the agreement, including the length of commitment and billing options. Ask whether you're buying anything other than electricity or natural gas if you say yes to their offer. Ask what happens if you want to change providers and whether you will be charged a termination fee or be held liable for some other costs.
Also ask whether the per-unit charge for the gas or electricity is fixed or if it will go up and down, and if so how. Find out where to call and what they will do if you have a question about your bill. Make sure the provider is registered with the proper authorities--such as the state regulatory agency. And find out whether you can block the unauthorized use of your name, address and usage information.
Q: I live in a rural area that's not served by one of the big electric companies. Does all this apply to me?
A: Both Maryland and Virginia require that utilities continue to serve all areas they do now--they can't cut off customers just because they're in hard-to-reach rural spots. Customers who get their power from electric cooperatives or municipal-owned utilities are on a different deregulation schedule in Maryland than those whose power comes from the big companies. In Maryland, co-op customers will get full electric choice on July 1, 2003. Virginia co-op customers all will be able to choose by Jan. 1, 2004 at the latest, although individual co-ops may propose pilot programs that would start sooner. In both Maryland and Virginia, municipal-owned utility companies have the option of deciding whether they want to offer customers a choice of providers.
Q: What happens if I fall behind in my bills?
A: You should still call your utility--the one that delivers power to you, not the one that generates it. There are programs that prevent power from being turned off during the coldest weather, and others that provide help to lower-income customers or those facing emergencies. None of the deregulation plans reduces your rights under these programs. Maryland's legislation deregulating electric utilities expands the assistance available at the state level. In Virginia, the issue is still under discussion. The District hasn't yet acted on deregulating the market for electric power.
Q: So let's say I switch. What are my chances of waking up the next morning and finding I suddenly have no electricity or no gas because there was some kind of glitch?
A: Slim to none, according to Maryland People's Counsel Michael J. Travieso. If your provider fails to deliver, you are switched back to your utility, which serves as the default provider, with the financial settlement to be worked out later.
The Roots of Deregulation
Maryland, Virginia and the District are proceeding on different timetables on utility deregulation. Customers in all three jurisdictions can already choose a gas provider through either pilot programs or unrestricted programs. Maryland and Virginia have set dates to begin electric competition. The District has not.
The Public Utilities Regulatory Policy Act, aimed at reducing dependence on overseas oil, requires electric utilities to buy power from outside generating companies. By promoting competition in power generation, and thus a non-utility power industry, the law paves the way for 20 years of deregulation.
In response to gas shortages, the Natural Gas Policy Act phases in decontrol of most natural gas prices at wellhead.
The National Energy Policy Act opens the electricity -generation market further, prompting states to consider competition in their own markets.
A Federal Energy Regulatory Commission order transforms gas pipeline companies from buyers and sellers to transporters, opening up competition.
Federal regulations open competitive access to transmission lines on a wholesale basis. The first states enact laws or regulations eventually opening electric competition. Most of these are high-cost states, including California, New York, Pennsylvania and Massachusetts.
VA The General Assembly enacts a law calling for formal study of electricity deregulation, beginning a lengthy series of hearings.
MD Along with other states, Maryland begins pilot programs for natural gas choice.
VA November: The State Corporation Commission recommends a transition to deregulated electricity.
MD December: The Public Service Commission approves electric deregulation, kicking off a series of roundtables on the details, leading up to legislative approval.
VA April: The General Assembly approves initial electric- deregulation legislation.
October 1998: Enrollment in the gas pilot program begins.
VA January: Gas choice programs begin.
July: The Electric Utility Restructuring Act becomes law. It includes details not covered in an earlier version.
MD April: The legislature approves electric deregulation.
March 1999: Pepco seeks to divest its power generation facilities in the District and Maryland, a step toward deregulation. The issue is still under study.
May 1999: All customers now eligible for the gas pilot program.
VA Summer: Electricity pilot programs begin.
MD April: Maryland residential customers can begin to sign up for new electricity suppliers.
July: Maryland's three-year phase-in of competitive residential electric service begins.
VA January: Phase-in of retail competition begins.
VA January: All customers are eligible for electricity choice.