Basic Generations Service (BGS) rates for PSEG electric customers have been established for the new year.  BGS rates are the default rate for customers serviced by the utility PSEG who have not shopped for a competitive electricity supplier.  The new rates will go into effect on June 1.

PSEG default rates for the supply portion of the bill are divided into a summer term that begins June 1 and extends through the end of September, and the non summer term that begins October 1 and extends through the end of May 2011.  The default BGS rates include the entire Supply section on customer PSEG bills.  This is often an area of confusion to business customers who look into the benefits of competitive rate shopping.  The total price to compare takes into account the generation rate as well as capacity charges.  When customers just compare the per KWh rate on their current bill they are not getting an apples-to-apples comparison.

In order to realize the actual price to compare, PSEG business customers should take their total supply charge and divide it by the total amount of KWh they consumed for the bill period.  This will result in a KWh rate that can be compared to offers from competitive suppliers.  This price to compare will include state taxes of 7%.  So if the competive rate does not include taxes (as will be stated on the contract) multiply the rate by 1.07 to get the true comparison rate.

The bottom line is that there are competitive electricity suppliers available for business customers serviced by PSEG.  Depending on the size of the customer and the type of electricity product chosen (fixed, variable, green energy, long term), savings can be as much as 25%.

Update: We found some great providers offering a variable and fixed rates in the PSEG electric area, see below:

With PPL Capped rates expiring at the end of 2009, PPL is now only in the business of delivering electricity and not responsible for generating or supplying electricity to businesses and consumers.  PPL is  currently providing electricity supply default service to those customers who have not shopped the competitive market.

Residential customers on the PPL default service are paying a rate of $0.10448 per kilowatt hour while small and medium size businesses in the GS1 and GS3 rate classes have a PPL default rate of $0.10402 per kilowatt hour.  Rates for all of these customer classes can be lowered to the $0.09 range, or possibly better, if customers take some time to shop the competitive energy market.

Responding to consumer fears of entering into a contract, many providers are offering a month to month option with no penalty for changing providers.  Customers should understand that with these type of agreements, the rate is variable and can change to anything at any given time.  On the contrary, fixed rates lock in a rate for a specific period of time.  Though it comes with the downside of a penalty if you leave the provider before the contract is up, you get the upside of securing a lower rate than the default service.  In the PPL electricity market, any fixed rate contract that is lower than the default rate ($0.10402 commercial) is guaranteeing savings for 2010.  The floating month to month rate only guarantees savings in the initial month of service with the new provider.

Join our club to find the lowest rates in your area.

February 15, 2010

Currently in Connecticut there are ten retail electric providers offering service to residential customers as an alternative to CL&P and UI GSC default rates.  However, of these ten, only four of them (Direct Energy, ConEd Solutions, MX Energy, Dominion) offer fixed rates.  With a fixed rate you know the exact rate you will pay for electricity for a set term (usually 12 months). Shopping for competitive Connecticut electric rates can save both residential and commercial customers money.

The other six providers offer different types of variable rates that can, and often do, change from month to month.  These variable rate providers often advertise a low introductory rate that will be good for the first month of service.  After the initial month, you can expect the rate to increase.

These providers are in a marketing war with each other.  They will show that they are offering savings versus CL&P and UI default rates with their introductory rate.  However there is no guarantee that they will continue to show savings after that first month.  They are hoping that once you switch to their service you will remain their customer for a long period of time no matter how high their rates become.  On the plus side, these variable rate contracts are usually month-to-month, so if you keep an eye on your rate you can leave if it becomes too high.

If you are a homeowner with good credit we recommend looking into one of the providers with fixed rates.  With a fixed rate you will know exactly how much you are savings versus CL&P or UI default rates, and you will have the peace of mind of knowing that the rate will be good for a set period of time.  The electricity market has a wholesale and retail side.  The wholesale market prices are constantly changing and have proven to be very volatile over the years.  Variable pricing can result in huge rate increases over a short period of time.

PPL Commercial Rates

Now that we are past a full month into the new year, PPL commercial customers are getting a first look at their new high PPL default rates which are 18-36% higher than what they were in December 2009.  The reason for this sudden increase is due to the fact that decade long capped rates set by PPL expired on December 31, 2009.

The exact amount of the increase is dependent of the customer classification (rate class) that is assigned to them by PPL.  Factors such as KW demand and annual KWh consumption determing the rate class for commercial clients.  Smaller mom and pop shops will see an increase of around 18% while larger office buildings, movie theatres, factories, ect. will see a larger increase closer to 36%.

With these increases in place, the competitive market for electricity in the PPL territory has heated up.  With more than a dozen licensed electric providers offering electric service in the territory, commercial customers have a variety of options to lower and manage the recent energy price spikes.  Also in the market are numerous electricity brokering and consultant outfits who inform their clients which providers are offering the lowest rates as well as provide information on different types of electricity rate products and contract concessions.

Current Competitive PPL Commercial Rates (updated daily):

Leave a comment or question to learn more:

January 21, 2010

On January 1, 2010 PPL electricity customers had their rates increase anywhere between 18-36%.  The increase was a result of the 1996 Pennsylvania Electricity Generation and Customer Choice Act which capped rates in the PPL territory from 1997 until the end of 2009.  Most PPL customers will get their first taste of this increase in the coming weeks when they see their first bill that will possess the new rate.

While competitive electricity rates have been on a slight rise the past few weeks due to a rise in natural gas prices, fixed rate savings are still available for PPL customers.  Residential and business consumers can lock in fixed rates that can save them up to 12% with current competitve prices.  Savy customers should try to install a rengotiation clause in their contract so that they can take advantage if prices come down even further later in the year.  Large business customers can also save more by looking into more exotic electricity products that would allow them to ride the wholesale electricity market at certain times of the day.

PPL has reported that about 13% of their clients have switched providers so far; a number surprisingly isn’t larger at this point.  The primary reason people have been slow to switch is a lack of understanding of what is going on.  There will most likely be a surge in switch requests in February after people see the rates that they paid in January with the PPL default service.

For information on competitive electric providers and rates in PPL, contact us at news@electricitywatch.org

Business Customers being served by one of the Connecticut Utilities (CPL, UI) are given many options now that the Connecticut electricity market has been fully deregulated.  Most offers that come from certified retail electric providers involve a certain fixed price per KWh set for a certain term.

Another option that exists for businesses is a floating wholesale index rate.  The index rate allows business customers to buy power for the posted wholesale electric price plus a small retail adder by the retail provider.  These rates have averaged below $0.09 per KWh compared to utility default rates of $0.1247 (28%) and competitive fixed rates of $0.105 (14%).  The wholesale index prices for Connecticut are posted and updated in real time at http://www.iso-ne.com/ which is the Regional Transmission Organization for New England.  The retail adder amount would be stated in a contract between a retail electric provider and the business customer.

Many large businesses who have the resources to educated themselves on all the benefits of electricity deregulation have been using index pricing to their advantage for several years.  Small and medium size businesses have the option to use index pricing as well with many of the competitive suppliers, however most suppliers do not spend time marketing the product because they feel that it will be too complicated for the average small business owner to understand.

If you are a small business owner who would like more information on index pricing, leave a comment on this article and we can provide you some literature and historic numbers on index wholesale electricity pricing.

Many businesses have been reluctant to look into the benefits of electricity deregulation because of the bad taste that telephone deregulation has left in their mouths.

When the telephone market first became deregulated, changing providers could be a huge headache for businesses.  There were interruptions in service, lengthy contracts, and promised savings that were negated by hidden charges and fees.  So now that electricity markets have become deregulated in states such as Texas, Pennsylvania, Connecticut, and New Jersey, there is a lot of hesitation for companies that are not educated about the logistics to look into an alternative provider.

Unlike the telephone market, the transition to an alternative provider in the electricity market can be extremely easy with no risk.  When an alternative electricity provider is chosen to save money, there are no interruptions in service.  This has to do with the way electricity deregulation is set up.  The lines and wires portion remains regulated by the state.  The same company that has serviced your lines and wires in the past will remain the same.  What has changed is your choice to select who supplies your electricity.  This means that nobody will have to come to you and change any wires or modify your electricity in any way.  The only thing that changes is the rate.

If you have not done anything and are still with your incumbent provider then you are on that provider’s default rate that the state mandates they charge all customers who are slow to choose a competive supplier.  Depending on your state and market conditions, the default rate can be anywhere from 10-30% higher then what a competitive supplier can provide you.

The only way to get off the default rate is to find an alternate provider to lock you in with a lower rate.  Then the alternative electric provider will supply your incumbent provider with the electricity which they will then supply to you.  You will not be able to tell a difference in service nor will you be able to tell when the switch is made because it is seamless.

Another issue that concerns bussinesses is the question of who they should contact if electricity goes out?  The incumbent provider is still regulated by the state and remains your lines and wires (or Transmission and Distribution) company.  They will still be the company to contact in the event that there is a power failure due to whether or other natural disasters.  They will still provide you with the same level of service that they always have, whether you continue to pay the high default rate or find another alternative provider.

There are no addition fees to make the switch from the incumbent provider to another, so there is absolutely no reason a company would not want to look into the benefits of electricity deregulation.  There are substantial saving available that can benefit any business.