The cold winter of 2013-2014 has resulted in a jump in wholesale energy prices across the country. Rising oil, coal, and natural gas prices have caused higher electricity prices for suppliers, and those suppliers have passed the expense on to their customers where possible.

Many electricity customers in energy choice markets have enrolled in variable rate plans over the last few years. Electricity companies offering variable rates often entice new customers into their service by offering a low teaser rate that shows impressive savings against the utility default rate for the first month. However, with time the variable electric rate inches up month after month, or rapidly if the energy markets see a big spike forcing electricity companies to pass the higher prices onto their customers.

In January and February many electricity customers of North American Power, Energy Plus, and Systrum Energy are seeing their bills double, and in some cases triple, do to skyrocketing variable electric rates. These electricity companies, and others, have attracted customers in over the last several years offering “no contracts” and rewards programs. However, as many consumers are finding out, not having a contract in place can be a costly mistake. Despite rising energy prices, consumers who have elected to enter into fixed electric rate contracts are not being hurt as their rates are locked for a specific term.

Electricity customers who are on variable rate plans should start shopping for fixed electric rates as soon as possible. If you are on a variable rate and haven’t gotten your bill yet it would be a good idea to call your supplier and get an estimate of how much the electric bill will be. Once you receive the electric bill, switching suppliers at that point will guarantee that you receive at least one more bill from your current supplier.

The Penelec electricity service territory is seeing an increase in shopping activity as consumers in the area have become better educated on the process and benefits of Pennsylvania energy choice. Competition has forced electricity prices down below the utility default rate which has given customers the ability to substantially lower their Penelec electric bills. Though the number of shopping participants has increased in the area, the majority of consumers are still unaware that they even have the ability to choose their electricity company.

Since 2010 Pennsylvania has been a model state in running a successful electricity choice market with dozens of energy companies establishing offices to solicit over 5.4 million residential homes receiving power. Initially the majority of the marketing focus from these competitive electricity companies has been towards the state’s larger electric utility areas, mainly PECO Energy and the PPL service territory. After competitive electricity companies saw the success in power shopping activity in the larger service areas a push to solicit customers in Penelec and other Pennsylvania service areas was enacted.

Thanks to lower Penelec electricity rates offered by alternative companies compared to the official default “Price to Compare” rate, 36% of the residential customer class is Penelec is now purchasing their electricity supply from a competitive supplier. This switch rate is actually higher than the current 32% PECO Energy residential switch rate, but more than 25% lower than the PP&L switch rate. As more Penelec residential customers become aware of the benefits of Pennsylvania electricity choice, mainly lower electricity bills, it is expected that the number of Penelec shoppers will rapidly increase.

Penelec, who encourages their customers to shop for lower rates, makes it easy for residential consumers to compare competitive rates to their default rate. Penelec posts their current price to compare rate on their parent company First Energy site. The Pennsylvania Public Utility Commission requires all competitive electricity offers to contain all components of Penelec price to compare rate, allowing consumers to compare rates side by side and eliminating the potential of hidden fees.

Below is a list of current, and updated daily, prices offered by electricity companies to customers in the Penelec service area.

Duquesne Light customers who have not shopped for competitive electricity rates are paying much more for power than they need to. Recently Duquesne Light increased their price to compare rate, the rate customers pay for electricity who have not selected an alternative supplier, from 9.32 cents to 9.89 cents. Meanwhile competitive rates give consumers the ability to pay as little as 6.47 cents which is 35% less than the current default rate.

The amount of money electricity consumers can save in the Duquesne Light area is among the highest in competitive energy markets in the country. Word of the potential to save on electric bills is getting around in the Pittsburgh area as 38% of residential customers have switched electric suppliers in order to get off of the high Duquesne Light default rate. Duquesne Light serves around 500,000 residential customers in the Pittsburgh and surrounding areas.

The Duquesne Light customers who are still paying the default price to compare often have a misunderstanding of how Pennsylvania electricity choice has been set up as well as a lack of trust in the alternative energy companies offering rates. These consumers should understand that switching electricity suppliers will not end their relationship with Duquesne Light. Duquesne Light will continue to deliver power to their customers no matter which electric supplier is selected to provide power. In addition, Duquesne Light also continues to send the monthly power bill and respond to power failure and emergencies.

The Duquesne Light price to compare is determine by an auction process where competitive energy companies bid for the right to service default paying customers. These companies have submitted bids with a premium on the pricing since at any time default customers can leave the default rate and sign a contract with an alternative energy company offering a lower electric rate. Duquesne Light collects the money for the default rates and passes it through to the energy companies who have won the previously held auctions. Duquesne Light does not care if their customers switch electric suppliers because their revenues and profit margins are derived from the delivery charges found on the Duquesne Light electric bill.

The delivery charge remain regulated by the state of Pennsylvania. Often consumers fear that if they switch to a lower electric rate than Duquesne Light will “make up the difference” by increasing their delivery charges. This could not happen since the delivery rates are approved at the state level for the entire class of residential customers. Furthermore, as noted above, Duquesne Light does not profit from the price to compare default rate that they charge, so it does not hurt them when a customer switches to a competitive electricity company.

While most of the marketing efforts of competitive electricity suppliers have been focused on the territories controlled by PECO Energy and PPL Energy, customers of Duquesne Light are finding the largest savings against their utility price to compare default rates.

Duquesne Light customers, who currently have a supply default rate of 8.89 cents, can currently lock in a 24 month rate as low as 7.19 cents which will yield a savings of 19% on the electric bill.  While customers new to electricity choice might be hesitant to lock in a rate for two years, it is important for them to understand the benefits of long term fixed electric contracts.  The fixed electric contract will save customers money right away and protect them from potential default rate increases in the summer and in 2012.  Electricity customers can also lock in for a shorter term at 12 months at a low rate of 7.55 cents resulting in a healthy 15% electric bill savings.

PECO electricity savings and promotions are expanding in the Philadelphia area as suppliers compete for market share.  The PECO territory saw electric price caps expire on January 1 which has opened the door for alternative electric suppliers to offer rates to PECO default rate payers.

Duquesne Light saw their rate caps expire several years ago.  However electric suppliers were slow to enter the market due to the low default price to compare rates that the utility was offering their customers as a result of an auction they held among wholesale energy suppliers.  Now that those default rates are higher than what retail electric suppliers can offer, electricity companies have started to offer service to customers as they can now offer lower electric rates and electric bill savings.  Customers who switch electric suppliers will still receive their monthly electric bill from Duquesne Light.  The only difference will be the lower electricity rate on the bill.

Current Duquesne Light competitive offers:

Rockland Electric delivers electricity to just under 63,000 residences in northern New Jersey.  Though electricity choice has existed in New Jersey for several years, competitive electricity companies have just recently started offering competitive electricity rates in the Rockland Electric area.

Though, as of December 2010, only 1.8 percent of the residential customers have chosen an alternative electric supplier, Rockland Electric residential customers can save as much as 18% versus the Rockland default rates.  Rockland Electric offers default electricity rates for those customers who do not shop and compare electricity offers.

People have been slow to shop the competitive energy market in the area mostly because they are unaware of their choices.  Of the four incumbent electricity utility companies in New Jersey, Rockland Electric is by far the smallest.  Because of this, the competitive electricity suppliers are focusing more of their marketing efforts on the bigger utility areas of PSEG and JCPL, even though the greatest savings opportunities currently exist for Rockland customers.

It is expected that more and more Rockland Electric customers will shop for lower rates in 2011 as they become more familiar with their electricity choice options.

Rockland Electric Price to Compare – $0.1215
	$0.097 /Kwh	20% Savings

It has been nine years since Texas first deregulated their electricity market.  When lawmakers first started toying with the idea of electric choice, they believed that energy deregulation would result in lower energy prices for consumers, improved customer service, product innovation, and increased energy jobs.  Almost a decade after the start of deregulation and all of these proposed benefits have come true.  Customers have access to dozens of Texas residential electric rates.

Over two dozen electric companies offer service in some of the biggest cities in Texas such as Dallas.  People moving to Dallas can choose electric companies based on price, length of contract, green energy options, convenience factors such as online billing options, and promotional offers.

Here are some of the more popular electric companies in Dallas TX:

Bounce Energy has a low introductory offer, easy online bill pay and energy usage access, and great promotional offers.

Green Mountain Energy offers a variety of wind energy options for those who may be willing to spend a little extra in return for doing their part to help the environment.

Champion Energy has competitive rates to go along with their award winning customer service.

With one of the most active electricity choice markets in the World, Dallas is constantly seeing new electricity companies enter the market to give Dallas consumers even more energy options.

PSEG electricity customers are finally able to save money on their electricity bills by choosing a lower rate than the default PSEG rates.

In recent years, electricity suppliers had been slow to enter New Jersey electricity market.  Now that the electricity companies are able to offer electric rates that are lower than the  utility basic generation service rates, companies have entered the market and are offering their service to PSEG customers.

To see if money will be saved, customers should look at the “Supply” section on their PSEG bill.  There they will find the electric rates that can be compared to alternative electricity company offers.  Electric savings are currently being offered by as much as 12.4%, but not all offers result in saving, so it is important for customers to compare rates.  Some PSEG bill payers are even choosing to pay more on their electricity bill for the right to buy 100% wind power or other forms of green energy.

Customers who shop for lower power rates might also find promotions that can further sweeten the deal on top of electric bill savings.  PSEG customers will still receive their electric bill from PSEG even after they switch electric suppliers.

The best offers, (lowest rates plus promotions) for fixed and variable electric rates, that we have found are below:

As electricity deregulation markets have matured around the country over the last several years, electric suppliers have gotten tricky on how they present their offers on contracts.  In short, the energy supply charge should include several components including the energy commodity, capacity, line losses, ancillary charges, and sometimes transmission charges depending on your specific market.   Many suppliers will show a rate that just includes the energy commodity charge, and then pass on the extra charges through another category on the bill.

Why do they do this?

Simply put, they do this to make their rate look lower than their competitors.  For example, one supplier might give a rate that includes everything for 7.5 cents.  Another supplier might give a rate that just includes energy commodity for 6 cents.  At first the 6 cent offer appears to be great.  However, when you get the bill you will see a line for the 6 cent charge followed by an additional section that has another 3 cents for all of the addition charges.  So in the end, that 6 cents is really 9 cents.

How do they get away with this?

It is all in the electricity contract!

It is extremely important to take the time to review all electricity contract offers to ensure that you are getting a true apples to apples comparison.

One of the reasons ElectricityWatch.org was set up was because I went through such a deceitful practice.  I signed an electricity contract for a fixed rate of 7 cents when in reality I ended up paying 8-9 cents per month.  During this time I could have paid a fixed rate of 6.65 cents.

Though everything is in the contract, many electricity companies have gotten very smart as to how they word their electric contracts so that the consumer overlooks important factors relating to the rate.  If you would like us to review your business electric contract, feel free to post a comment with the request and we will contact you to do so.

Keep in mind this is for business electricity customers.  Residential customers are protected by their state utility commissions from such practices.  Businesses, however, are expected to do their own due diligence.

PECO electric customers are now able to shop  for better rates from alternative electricity companies, but are the prices better?

Some offers in the PECO territory are coming below the PECO default rate, known as the price to compare.  The PECO price to compare is the rate that PECO charges their customers who do not shop the competitive market for alternative electric options.  The price to compare rates are determined by a series of auctions that PECO facilitated in 2010.

The price to compare rates will change every quarter as PECO scheduled additional auctions in 2011 for a percentage of the default service users.  Due to this fact, it is important for PECO energy customers to think not just about what their current default electric rate is, but what it will be, especially in the summer when electricity use is at its peak.

Some customers in the PECO area are locking in long term fixed rates to protect themselves from potential future increases.

In addition to savings, customers can find promotion offers like the $50 gift card above from some electric suppliers, here are some popular choices with great rates.

Other companies are offering variable electric rates that are showing initial savings off of the PECO price to compare rate.  Though it is important for consumers to watch those variable rates closely as they can go up at any time.

We have recently been getting a lot of questions pertaining to the Energy Alliance of Pennsylvania as a result of their increased rates over the past few months.  After much research, here is what I have discovered:

The Energy Alliance of Pennsylvania is a licensed retail electric provider that was set up by the Manufacturing and Business Association (MBA) through Fluent Energy as a way to get better electric rates for their members.  In their own words….

“The Association has established the Employers’ Energy Alliance of Pennsylvania, Inc. (EEA-PA), which will act as an energy supplier for its more than 4,700 member companies and organizations operating throughout central and northwest Pennsylvania. By purchasing directly from the electric grid and gas pipeline and eliminating broker commissions and marketing costs, the EEA-PA is able to pass savings directly on to participating members.” (keep a mental note of the words in bold)

The statement sounds good in theory, but many members saw their rates skyrocket to over $0.13 a few months ago when PPL default rates are at $0.10402 and the majority of businesses in the area are able to get low fixed rate offers of $0.085 (35% less than the $0.13 rate).  So what is going on here?

First, upon reviewing the Energy Alliance Electric Service Agreement, the Alliance buys their electricity on a monthly basis from the wholesale market which makes them extremely and completely open to spikes in the market.  When the Alliance charged their customers over $0.13 the wholesale market did see a bump in prices.  However, the jump in wholesale prices should not have caused rates to go up as high as they did.  Here is where things get really interesting….

In the Electric Service Agreement, the part that explains how customers will be charged, it reads:

“Basic Commodity Price: this is a variable price which is comprised of the weighted average PJM Independent System Operator commodity price and other associated costs of goods sold, plus the administrative fee per kWh set forth below, and any applicable taxes and/or agent fees.”

To break that sentence down, the first part (basic commodity price) is the wholesale price of electricity.  The administrative fee per kwh is listed in the contract at $0.0012 which isn’t out of the ordinary.  Applicable taxes are always warranted.  Then comes the kicker, ever so slightly written, “agent fees”.  What exactly is an agent fee?  It is not defined anywhere else in the contract, and to me it seems like it is the very thing the Alliance set out to eliminate in the first place (bold area from above “liminating broker commissions and marketing costs“).

Basically this “agent fee” gives the Energy Alliance the right to tack on whatever commission they would like on a monthly basis, and it is possible that when the members of this alliance payed a rate of $0.13 cents per KWh a few months ago, someone walked away with a nice undeserved bonus.

I would recommend to any business involved in this Energy Alliance to seek out a fixed electric rate that will prevent such spikes to happen in the future.  For a list of electric companies offering fixed rates and their offers, email us or write a comment to this article.

The thing that really gets to me about the Energy Alliance of Pennsylvania is the way they market themselves.  They come off trying to sell the whole “power in numbers” mentality when really their buying structure is not taking advantage of their buying power at all.  Furthermore, there statement of lower rates due to the fact that they will eliminate broker fees, followed up by adding their own agent fees is just plain misleading.  Even the name “Energy Alliance of PA” gives the impression that they are a non-profit when clearly they are as profit seeking as Walmart or McDonalds.