What’s Up?
March 24, 2011
I say potato.
You say patato.
The difference may be just an inflection
Or the pronunciation of the word
(in this case it was my spelling, so you get the gist)
However, we all know what we are discussing.
Shame that the same thing cannot be said
About the word…….
Deregulation……
We should all know what we are discussing
We should all be on the same page…..
But there are so many stories……
Each one providing the best deal……..
A once in a lifetime offer……
Get in on the ground floor…….
What is going on????
With electric prices being at a 7 year low
We are finding, that everyone and their brothers,
Are now selling energy………
I get calls at my office almost….. everyday
Would like to switch electric providers?
How would you like to earn some extra cash?
The market is being inundated.
I am surprised Comcast and Verizon are not selling energy?
HBS has been selling energy to commercial clients for over 10 years
I would like to take a few moments to add our perspective.
Define what we see as the opportunity.
Educate our clients and friends.
Business
- The deregulated electric market price is closely tied to natural gas pricing.
-
- Thirty ( 30%) of the electric generated in the US is made with natural gas. Therefore, natural gas is a good indicator of the market prices.
- Natural gas market prices are the lowest they have been in the last 4 years.
-
- As a result, the deregulated market price of electric has also dropped.
- Many experts think that we may have hit the floor on natural gas prices back at the end of October 2010.
-
- The market has gone up and down several times since then, but it has never gone back to the low point recorded on October 25th, 2010.
This information indicates that clients should be looking to lock in or fix the price of electric with a 3rd party deregulated provider for a minimum of 1 year…… possibly 2 years.
We have actually seen instances where the 2 year fixed price is more competitive and offers more savings.
Each account is unique. Prices are all based on demand factors.
Are you a seasonal account?
(Highest usages during summer months)
Do you use most of your energy during the day?
(On Peak….when prices are higher)
Or do you have mixed usage?
(On Peak and Off Peak)
All these factors play into defining the deregulated market rate for your account.
Do you have annual usage demands
vs seasonal usage demands……
Your fixed rate will be lower.
(your demand usage is being spread out over the entire year)
Is your usage a mixed between on peak usages and off peak usages
vs only using power during the day,
when rates are the highest
Then your rates will be lower.
Each provider has their sweet spot. A client profile, they are most competitive with in that market.
HBS is an independent energy management consultant. Thru our strategic partnerships, we represent all the major deregulated gas and electric providers selling energy in deregulated states.
Our expertise is the ability to properly define the market and select the provider(s) who will bring the most competitive fixed rate, offering the best opportunity for savings to our clients.
What about Variable rates?
There are many companies now offering variable rates for electric.
Month to month contracts….offering savings of around 10%.
If the market prices are near the bottom,
Why would it not be in the clients’ best interest to lock in a fixed rate instead of floating with a variable rate?
As the summer season starts,
Market rates will also go up,
Due to summer demand.
So will those variable rates!!!!
It only makes sense to lock in on a fixed price,
if the market presents the opportunity.
In the deregulated energy market,
You are dealing with a commodity.
Timing is everything.
Let HBS be your eyes and ears.
Next week, we will outline using an independent broker vs buying online. Also, what does it mean when you say the price is fully loaded
To learn more about deregulated opportunities for your company email george@hbsadvanatge.com
Visit us on the web www.hutchinsonbusinesssolutions.com
Saving in the Deregulated Utility Market
March 21, 2011
Note: With the current deregulated market opportunities now being presented to many business that qualify, the market has been inundated with new sales personnel. I found this article provides on objective overview of questions you should ask and details you should know before making a decision.
There are many companies offering variable electric rates. I would not recommend this solution at this time.
With natural gas prices being the lowest they have been in the last 3 or 4 years, there are great opportunities to lock into a fixed price electric contract for a 1 or 2 year period.
By Carl Shaw
With the deregulation of energy in many parts of the US, competition is now allowed between energy companies to provide electricity at discounted rates directly to their customers. These Energy Service Provider Companies (ESCOs) are licensed by individual states and are required to adhere to the applicable regulatory guidelines set by the Public Service Commissions (PSC) or Public Utility Commission (PUC). Customers (end-users) also have the opportunity to work with electricity brokers or consultants who can compare different offers and provide additional services to help manage your monthly energy spending and costs.
If you are a business spending a minimum of $3000 a month on your electric or natural gas bill, you may qualify to choose your electric or natural gas supplier in deregulated markets, which could create savings opportunities. Companies that can control or manage their electric consumption to use more electricity in the off-peak hours will find the greatest opportunity for savings. In deregulated markets, you now have a choice and can choose lower energy rates without any risk or local service change.
Your local energy service providers buy natural gas and electricity on the open market at wholesale prices based on the current market conditions and then bill their customers at increased rates to include margins and/or service fees.
Independent Deregulated brokers can put your company in a competitive position by leveraging extensive buying power to help you develop energy supply procurement programs. They can conduct an unbiased rate and tariff analyses that may result in substantial savings to you.
Due to the current economic conditions and the complications deregulation has caused there are many new energy advisory companies popping up, so be sure to know all the facts before making any decision.
When choosing a qualified utility tariff analysis & rate optimization firm to represent you, you should be aware of a few things:
First, be sure that the price you are quoted from your local provider includes all charges. Should you be talking to a consultant or broker, make sure the price is “fully loaded” meaning, does it include the 7% loss allowance (to deliver 100,000 kWh of electric, the providers must actually send 107,000 kWh, for there is a 7% loss in transmission)? Also does it include the local sales tax?
In PA, you must also ask if the price includes GRT (gross receipt tax) and RMR (reliabilty must run). RMR is a pass thru charge from the provider that allows them to meet peak demand periods when they must use additional resources to meet this demand. This is normally found during the summer months.
All these important components should be included in the quote from your deregulated provider to make an accurate comparison. These components are included in your price to compare from your local provider. Often, companies will provide a low end quote without including sales tax and a load allowance. Be sure you are comparing apples to apples. Often when these figures are included, their real quote is much higher.
Does the company providing your quote have an Energy Information Management System in place, to make sure that you are getting the best available rate?
Are they shopping your account to more than 1 provider. Each provider has a sweet spot (a market they are most competitive in). An independent broker who knows the market will be able to identify these providers and work to get the best price.
Information is power. Knowing what questions to ask will save you time and money.
There are opportunities to save from 10% to 25% in the deregulated electric market depending on your usage patterns.
When making a final decision, know that you are dealing with a commodity and timing is everything. Market fluctuations may happen on a daily basis.
November 30th, 2010 Adam Ebner
As reported in Nationwide Deregulated Energy News
In a very competitive marketplace, energy deregulation gives businesses better control of their business electricity costs. Aside from that, there are myriad other benefits and option that their companies would get from a deregulated and competitive energy market – options that were not possible in the past due to high energy expenses and limitations set by the monopolized energy industry.
The deregulation of the many utilities markets gave birth to the emergence of several retail electric providers all competing for subscriptions from both residential and commercial energy users in the state and in energy deregulated cities such as Philadelphia, Pittsburgh, New York City, Chicago, Washington DC, Houston, Dallas and many others. Now given the power to choose, selecting from over 50 retail electricity providers can be a daunting task indeed; with businesses finding themselves at the losing end should they fail to choose the best provider for their needs. This is why businesses should work in partnership with certified electricity brokers to negotiate in their behalf the best electrical rates, payment schemes and other amenities from the various Texas electric companies.
Electricity Brokers:
Your Helping Hand Unlike electricity management at home, businesses have more complex processes and operational needs for electricity that if not managed would find them dealing with extremely high energy costs that would eventually affect their bottom line. Electricity brokers can come into the picture and help businesses find ways on how they can efficiently use Texas electricity and help them minimize their energy costs. These brokers deal and negotiate electrical rates with retail electric providers for the benefit of the business.
No matter what business or industry your company may be in, electricity brokers can provide professional services using up-to-date information of the energy market in a bid to obtain the best commercial electricity deals for the company.
Why Should You Use Electricity Brokers to Shop Electricity?
Businesses may not have the resources available to have an independent study or analysis of the various retail electric providers offering commercial electricity before they switch and commit to the services of one. Aside from this, companies may have to deal with all the other elements in the very complex energy market such as new regulations, changes in fees, penalties, reduction of carbon emissions, etc. Hiring an electricity broker can spare the company from all these, so that all their staff and resources can focus on only one thing – doing business.
Electricity brokers can help companies with their procurement decision, eliminate possible over payments, recover over payments, management of energy consumption, and continuous energy usage analysis. Electricity brokers can uncover and identify areas in the business processes where they can implement significant improvements. These brokers are not in any way tied up with any major retail electric provider, allowing them to give unbiased advice to businesses and help them get the best energy solutions for their companies.
Our Perspective:
Hutchinson Business Solutions (HBS) is an independent energy management company. We represent all the major providers selling deregulated energy in deregulated states. We will do a full analysis of your account and shop your account with our providers to find the best value and savings for your company.
HBS clients are finding savings from 10% to 20% in the deregulated utility market.
To learn more email george@hbsadvantage.com
Making It Easier for Consumers to Comparison Shop for Electricity
January 28, 2011
- For the first time since the state broke up its electric monopolies more than a decade ago, residential customers and small commercial operations have some choices about who supplies the power to light their homes and businesses.
Because of a steep drop in natural gas prices and the way the state buys electricity, independent power suppliers have an opportunity to undercut the price that public utilities offer customers.
“The big story on the retail electricity side has been the emergence of residential and small commercial markets,” agreed Jay Kooper, New Jersey state chair of the Retail Energy Suppliers Association, a trade group representing so-called Third-Party Suppliers (TPS).
Falling Prices
Until natural gas prices fell, more than 99 percent of residential customers elected to stay with their incumbent electric utility to buy their power, a fact that generated criticism of the state’s deregulation law. Other power suppliers found it hard to beat the price of the incumbents, in part because fuel costs had been rising and the state mitigated those spikes by buying power in chunks over three years, which tended to moderate those increases.
But when natural gas prices began falling more than a year ago, suppliers could undercut the price offered by the state, with some offering price discounts of up to 15 percent on the supply portion of customers’ bills. Nearly 100,000 customers have switched as of November, according to the most recent data compiled by the state Board of Public Utilities (BPU).
With customers looking around for options, the big question for third-party suppliers is how do they sustain the business, especially if natural gas prices begin rising.
To Kooper, the answer is to revamp the state’s policies in two key areas: how to deal with customers who fall behind in their bills and owe the third-party suppliers money and the so-called price-to-compare, a mechanism set up by the state to help customers shop for new suppliers.
“We need to dive into the nuts and bolts of the retail market to keep it sustainable for the long term,” Kooper said, noting the changes his group is seeking have already been adopted in other states with deregulated energy markets.
Gaining Momentum
Board of Public Utilities President Lee Solomon, who ordered the stakeholder hearings on the issue, said he is trying to take advantage of the momentum created by new suppliers coming into the market and make it easier for them to compete with the incumbents.
Without changes, Kooper said the suppliers will be subject to a “boom and bust” cycle when natural gas prices rise as they most inevitably will. What the suppliers are seeking is a level playing field to compete with the utilities, he said.
Along those lines, the group is advocating requiring the utilities to purchase the suppliers’ account receivables, or unpaid customer bills. Kooper argued such a change would be fair because utilities are already are protected from uncollected bills by a surcharge, which allows them to pay off those bills.
The group is also seeking to establish a uniform price-to-compare system because each of the four utilities uses a different scheme to help customers compare prices, according to Murray Bevan, counsel to the group.
“As retail markets evolve, it’s very important that price-to-compare is as close to an apples-to-apples comparison as possible,” Kooper said. “Without these mechanisms, it makes access to the smaller customers trickier and riskier.”
About Deregulation
January 27, 2011
As presented on PSEG website
Before Deregulation
Prior to New Jersey’s restructuring, PSE&G was responsible for generating electricity, transmitting the power to all regions of their service territory, distributing the power to the individual homes and businesses, and billing and service issues. In addition, they were also responsible for all repairs to the electric lines and equipment.
After Deregulation
As a result of the New Jersey Energy Choice Program, the different responsibilities of the utilities were “unbundled” and the power industry was separated into four divisions: generation, transmission, and distribution, and energy services. The generation sector has been deregulated and, as a result, utilities are no longer the sole producers of electricity. The transmission and distribution sectors remain subject to regulation – either by the federal government or the New Jersey Board of Public Utilities. No matter which electricity supplier you choose, PSE&G will continue to service the transmission and distribution sectors of your electricity.
Competition is allowed between companies to provide power at discounted rates and superb customer service directly to customers. These companies are licensed by the state of New Jersey. You also have the opportunity to work with an electricity broker or consultant who can compare different offers and provide additional services to help manage your energy spending.
In most cases, PSE&G will continue to send you your utility bill. So the only thing that changes if you shop for a better rate is that better rate.
Out Perspective
Deregulation has presented a great opportunity for savings in the business sector. If you are a company spending a minimum of $5000 a month on electric and you are not taking advantage of this opportunity, feel free to give us a call and we will present an overview. 856-857-1230
Or, if you would like to know more about deregulation opportunities for your business email george@hbsadvantage.com
HBS has been providing independent deregulated energy management solution to our business clients for over 10 years. We represent all the major deregulated energy providers selling energy in deregulated states.
Visit us on the web www.hutchinsonbusinesssolutions.com
Natural gas costs unlikely to remain low through 2011
January 24, 2011
David Parkinson – Globe and Mail Update Dec. 31, 2010 5:41PM EST
When Arthur Berman argues that natural gas is destined to have better prices in 2011 than it had in a mediocre 2010, he isn’t talking about technical price charts, or historical correlations, or relative valuations, or even supply-and-demand balances.
No, his view is more down to earth. He’s talking about geology.
“I’m a working petroleum geologist, I’m not a financial analyst,” said Mr. Berman, a prominent Houston-based energy consultant whose controversial views on the North American shale-gas phenomenon have raised eyebrows in the industry. “We probably have a lot less natural gas resource than is commonly believed. “So, what I see is that natural gas prices will not remain depressed. I’m not a price forecaster, but I have every reason to believe that a long position in natural gas [investing] is a smart position.”
The natural gas pricing story has been all about shale gas in 2010, and its fate in 2011 is closely tied to this big wild card, too. Thanks to advances in drilling technology for extracting gas from seams in shale rock, there has been a rapid expansion of drilling in shale plays that were once considered impossible to economically exploit. The resulting boom in production has unleashed substantial new supplies on the North American marketplace, outstripping demand and bloating inventories. Volumes of gas in U.S. storage facilities swelled to record levels last month – 40 per cent higher than they were 10 years ago, almost 20 per cent higher than five years ago – even as gas consumption has rebounded to near pre-recession levels.
That kept natural gas prices low and in decline for most of 2010. Even with the high-demand winter season approaching, prices struggled to stay above $4 (U.S.) per million British thermal units on the New York Mercantile Exchange well into December – their weakest December prices in nearly a decade.
The majority of industry analysts believe the shale-gas boom will continue to keep supplies well above consumption levels in 2011, weighing down natural gas prices. “The fundamentals of oversupply are not likely to change in 2011,” said Peter Tertzakian, chief energy economist at ARC Financial Corp. in Calgary. “Since we expect U.S. natural gas demand growth to come to almost a standstill in 2011 and supply growth to stay in positive territory, the inventory glut remains a concern,” said analyst Dominic Schnider of UBS AG in a recent research note.
But a vocal minority – led by the likes of Mr. Berman and renowned long-time oil and gas forecaster Henry Groppe – believe shale gas may be a bubble that could begin to burst in 2011. They are concerned with both the extremely rapid rates at which production from new shale-gas wells drops off, and the high costs of development and production that suggest to them that producers won’t be willing to keep up the high pace of drilling in shale plays at these unprofitable prices much longer. “[Shale] is a great new resource. I don’t dispute for a moment the size of the resource or its importance,” said Mr. Berman, who, like Mr. Groppe, serves as a consultant to Toronto-based fund management company Middlefield Capital Corp. “What I question is, ultimately, what it will cost to produce the resource.” Mr. Berman’s analysis tells him that North American shale-gas reserves have been exaggerated; that “more than half of the commercial reserves are produced in the first year” of each well; and that the full costs for producing shale gas work out to about $7 per million BTU – far above the current selling price.
He believes companies have been encouraged to aggressively drill U.S. shale plays due to regulations requiring producers to either initiate drilling on their properties or lose them – they want to secure the land. But that won’t continue through 2011, he said. “As I listen to the comments of the executives of the companies that are most active in the shale plays in the U.S., they’re all saying that they’re going to continue to hold the land through the first half of 2011, and then you’re going to see a big decrease in [drilling] rig count,” Mr. Berman said. “They’re smart people; they’re not going to continue to do this beyond the time that they have to.” Instead, he said, companies will redirect their drilling rigs to oil properties, where the cost-to-price equation is much more profitable. That will slow natural gas volumes and change market perception of shale’s potential, he said – and that will push up prices. “It would not surprise me to see the end of 2011 start to see a notable recovery of price,” he said.
Mr. Tertzakian acknowledges that natural gas prices must eventually revert to at least high enough to cover “the marginal costs of producing natural gas in North America,” which he pegs at the $5 to $6 range. However, he doesn’t see that happening in 2011 – and he doesn’t envision a major drop-off in shale drilling or a serious hit to supplies over the next year. “There’s no shortage of gas in the ground. We can debate the technical nuances, but at the end of the day, it takes a certain amount of money to exploit these things – the only restriction is the availability of capital.” He expects some slowdown in natural-gas rig count in the second half of next year could moderate supplies, but that won’t do much to make up for what should continue to be a weak market in the first half – making for another year of 2010-like prices.
“Prices in 2011 will be similar to 2010,” agreed Bill Gwozd, vice-president of gas services at Calgary energy consulting and analysis firm Ziff Energy Group. “That’s not a healthy price for producers – but it’s quite nice for consumers.”
PSEG approves you switching service providers under the new Gas & Electric Dergulation Law…..Really!
January 17, 2011
As presented by Public Power (An overview of the deregulated electric in the residential market)
Many of those that are considering switching over are a little confused about what is actually happening.
You are not switching your gas & electric company, you are only switching service providers.
What this means,for example:
If PSEG is your current Gas & Electric Company. They will remain your Utility company. They will still service your home if you have a problem or power outage etc. You will still receive and pay your Bill thru PSEG. What you are doing is simply switching where your Gas and Electric is coming from. In this case you will be asking PSEG to simply obtain your Gas & Electric from Public Power,LLC instead of their current provider. Currently Public Power per Kilowatt rate is cheaper than PSEG ‘s provider. You can check on your rate by looking at your BILL and looking up the kWh rate.
Then go to https://ppandu.com/historical_rates.php to check Public Powers’s historical rates for other areas they currently service. Though rates vary from month to month, you will find they have been historically lower then PSEG, Con Ed and many other NY & NJ utility providers.
Actual electric rates for 2009 in January were 11.2 for Public Power and Utility (PP&U), … Feb 2010, 9.999*, 11.051*, 11.568*. Jan 2010, 9.999*, 11.051*, 11.568* …
PSEG Sept 2010 Average Residential rate is 12.00 per kWh
Currently if you are using under 600 kWh per month you are paying about 11.46 per kWh. If you never exceed that all year then your rate will stay at about 11.46.
But as soon as you go over 600 Kwh June thru Sept,that part of your bill is jacked up to about 12.34 per kwh. So on average if you are using from 601 kWh and more during the year, the blended average rate is about 12.00 per kwh. Understand above ONLY reflects the cost of electricity, not the PSEG delivery charges etc. The rates we are concerned with are just the BGS Energy charges, which on your bill is the “Rate to Compare” when you are considering a 3rd party supplier for your electric such as Public Power.
SEE BELOW THE PSEG RATE(TARRIF) Chart (approved June 2010) Note the highlighted rates
PUBLIC SERVICE ELECTRIC AND GAS
COMPANY Twenty-Eighth
Revised Sheet No. 67 Superseding
B.P.U.N.J. No. 14 ELECTRIC Twenty-Seventh Revised Sheet No. 67
BASIC GENERATION SERVICE – FIXED PRICING (BGS-FP)
ELECTRIC SUPPLY CHARGES
APPLICABLE TO:
Default electric supply service for Rate Schedules RS, RSP, RHS, RLM, WH, WHS, HS, BPL, BPLPOF, PSAL, GLP and LPL-Secondary (less than 1,000 kilowatts).
BGS ENERGY CHARGES:
Applicable to Rate Schedules RS, RHS, RLM, WH, WHS, HS, BPL, BPL-POF and PSAL Charges per kilowatthour:
| Rate
Schedule |
For usage in each of the
months of October through May |
For usage in each of the
months of June through September |
||
|
Charges |
Charges |
|||
| Charges | Including SUT | Charges | Including SUT | |
| RS –first 600 kWh | 11.4627 ¢ | 12.2651 ¢ | 11.4356 ¢ | 12.2361 ¢ |
| RS – in excess of 600 kWh | 11.4627 ¢ | 12.2651 ¢ | 12.3477 ¢ | 13.2120 ¢ |
| RHS – first 600 kWh | 9.8139 ¢ | 10.5009 ¢ | 10.9809 ¢ | 11.7496 ¢ |
| RHS – in excess of 600 kWh | 9.8139 ¢ | 10.5009 ¢ | 12.2005 ¢ | 13.0545 ¢ |
| RLM On-Peak | 16.1526 ¢ | 17.2833 ¢ | 15.6936 ¢ | 16.7922 ¢ |
| RLM Off-Peak | 7.4633 ¢ | 7.9857 ¢ | 7.8736 ¢ | 8.4248 ¢ |
| WH | 9.5068 ¢ | 10.1723 ¢ | 10.6903 ¢ | 11.4386 ¢ |
| WHS | 7.7482 | 8.2906 ¢ | 8.9246 ¢ | 9.5493 |
| HS | 10.3708 ¢ | 11.0968 ¢ | 13.9608 ¢ | 14.9381 |
| BPL | 7.3379 | 7.8516 ¢ | 7.6450 ¢ | 8.1802 ¢ |
| BPL-POF | 7.3379 ¢ | 7.8516 ¢ | 7.6450 ¢ | 8.1802 ¢ |
| PSAL | 7.3379 ¢ | 7.8516 ¢ | 7.6450 ¢ | 8.1802 ¢ |
The above Basic Generation Service Energy Charges reflect costs for Energy, Generation Capacity, Transmission, and Ancillary Services (including PJM Interconnection, L.L.C. (PJM) Administrative Charges). The portion of these charges related to Network Integration Transmission Service, including the PJM Seams Elimination Cost Assignment Charges, the PJM Reliability Must Run Charge and PJM Transmission Enhancement Charges may be changed from time to time on the effective date of such change to the PJM rate for these charges as approved by the Federal Energy Regulatory Commission (FERC).
Kilowatt threshold noted above is based upon the customer’s Peak Load Share of the overall summer peak load assigned to Public Service by the Pennsylvania-New Jersey-Maryland Office of the Interconnection (PJM). See Section 9.1, Measurement of Electric Service, of the Standard Terms and Conditions of this Tariff.
Note: Hutchinson Business Solutions has been providing independent deregulated energy management solutions for corporate clients for over 10 years. Although we do not currently provide these services to the residential market, we felt that it is important to make this information available to the general public, since many residential customers are now looking at this opportunity.
Date of Issue: May 20, 2010-Effective: June 1, 2010
Issued by FRANCES I. SUNDHEIM, Vice President and Corporate Rate Counsel
80 Park Plaza, Newark, New Jersey 07102
Filed pursuant to Order of Board of Public Utilities dated March 1, 2010
in Docket No. E009050351
New Jersey consumers perplexed by elecric-power options
January 17, 2011
By Andrew Maykuth
Inquirer Staff Writer
The pitches are often long on enthusiasm, but short on facts.
“When you ask for details, they just say, ‘You’re going to save money!’ ” Rosenbloom said.
The Burlington County resident looks longingly across the Delaware River, where Peco Energy Co. customers are rapidly moving into a market-rate environment.
Pennsylvania residential customers have access to a wealth of comparative information on rates assembled by the Public Utility Commission or the state Office of the Consumer Advocate.
But in New Jersey, where suppliers are offering residential discounts of 12 percent and more, consumers are largely on their own when it comes to assessing the data.
“We don’t know what to do,” Rosenbloom said.
J. Gregory Reinert, the communications director of the New Jersey Board of Public Utilities, said there were too many offerings for Garden State regulators to manage the data on behalf of customers.
“We do not provide comparison data of third-party suppliers or utilities,” he said.
“Customers need to do comparison shopping by either calling or visiting the websites of each company to review the tariffs or promotions, and make their own comparisons and decisions,” Reinert said.
New Jersey’s approach stands in contrast to the model states lauded in a recent industry study of electricity deregulation. Advocates of market rates say competition helps suppress electrical costs by encouraging more efficiency and conservation.
Nat Treadway, the managing director of a Houston firm that conducts an annual assessment of restructured markets, in December singled out Pennsylvania’s system for praise.
In most deregulated states, including New Jersey and Pennsylvania, customers are free to choose the company that generates their electricity, which makes up the biggest part of their bill. Traditional utilities, such as PSE&G and Peco, are solely distributors of power and do not make money off power generation – even on the electricity they buy on behalf of customers who do not switch.
Treadway, managing partner of the Distributed Energy Financial Group, said the best markets for encouraging electrical choice were in Texas and New York.
By contrast, Treadway called New Jersey’s restructured residential market “marginal.”
Ronald M. Cerniglia, director of governmental and regulator affairs for Direct Energy Services L.L.C., a large electricity marketer operating in several states, called New Jersey’s marketplace “suboptimal.”
He said the best competitive markets set up rules that encourage alternative suppliers to do business while still providing traditional consumer protections.
Regulators in thriving markets also make efforts to educate customers. One way is to maintain websites with neutral cost comparisons.
The Pennsylvania PUC’s papowerswitch.com lists most current suppliers, and some of their offerings. The Texas and New York utility commissions operate sophisticated websites that allow consumers to search for competitive offers by zip code: powertochoose.org and newyorkpowertochoose.com.
The New Jersey BPU rolled out a website for power-shopping after it opened electricity markets to competition in 1999, part of a $13.5 million promotional effort.
But New Jersey’s rates were still rigidly structured, and residential suppliers stayed away. The BPU’s website was abandoned in 2003 and the domain name was taken over by a Spanish pornography site, according to the Newark Star-Ledger.
Only in the last year have alternative suppliers planted their flags in New Jersey’s residential markets. As of November, 98,700 customers out of New Jersey’s 3.3 million households had switched to alternative suppliers, up from a mere 213 households in 2009.
By comparison, Peco Energy Co. says 96,000 of its residential customers have switched suppliers, most in the two weeks since rate caps were lifted Jan. 1.
The BPU provides the names of suppliers on its website, but the list appears to be out of date. South Jersey Energy Co. is listed as a residential electrical supplier even though it has been “out of residential for a number of years,” according to Joanne Brigandi, a company spokeswoman.
And in some cases, it is difficult for New Jersey customers to locate even the most basic information from which they can make an informed choice.
PSE&G’s basic-generation service – the price to compare – is listed as 11.5 cents per kilowatt-hour on some alternative suppliers’ websites.
PSE&G spokeswoman Karen A. Johnson confirmed Friday that the utility’s price to compare is 11.5 cents per kilowatt-hour.
Several suppliers are offering discounts below either price. They are listed above.
Our Perspective:
Hutchinson Business Solutions has been providing deregulated energy management solutions to our business clients for over 10years. Although we currently do not serve the residential markets in deregulated states, I found it prudent to offer some insight to the many residential clients now seeking savings in the deregulated electric market.
Since NewJersey just introduced the opportunity to their residents in the spring of 2010 and Pennsylvania in January 2011, many people have jumped on the band wagon selling electric.
We get several calls daily from 0ur clients asking questions about saving for their home electric. The first thing that I caution them is to make sure the price that is being presnted is fully loaded and contains all the factors that are included to make a cost to compare analysis. Does it include a 7% loss allowance (to deliver 100 kw of electric you must send 107 kw for there is a 7% is line loss in the delivery of the electricity) and 7% sales tax. These factors are included in the PSEG and AC Electric price to compare.
The second thing we caution clients to look for is a fixed price. Natural gas prices are the lowest they have been in the last 3 to 4 years. Although they have spiked recently due to the winter cold, prices are still very attractive. Thirty % (30%) of the electric generated in the US is made with natural gas. Because of this, natural gas prices serve as a stong indicator used for electric market prices. By choosing a fixed price, you can lock your position for a 1 or 2 year period.
Variable pricing does not provide this opportunity and is therefore a more riskier decision at this time.
Proceed with caution and make sure to get all the facts before choosing a deregulated residential electric provider.
Read more: http://www.philly.com/inquirer/business/20110116_New_Jersey_consumers_perplexed_by_elecric-power_options.html?viewAll=y#ixzz1BFl4JZXL
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