It's harder to escape increase in BGE rates

March 25, 2007|By Jay Hancock | Jay Hancock,Sun Columnist

Just as the General Assembly planned it last year, the real pain from BGE's electric-rate increase won't hit until June 1 - seven safe months after the election.

Unfortunately, your options to do something about it are doubly diminished. You can't raise heck at the voting precinct. And weather worries and regulatory delay have not only reduced the alternatives to Baltimore Gas and Electric's standard electricity product but raised the cost of those that remain.

Still, alternatives exist, including new chances to buy "green" kilowatts. To judge from my e-mail, the desire to dump BGE's default product hasn't disappeared.

On June 1, the average annual price of the juice BGE pipes to your house will shift to about 10.6 cents per kilowatt hour. Add in BGE's distribution fee and the bill goes to 13 cents or $1,560 a year for a typical BGE household. (We're talking electricity only; natural gas is separate.)

Because BGE locked up some supply over the winter, when prices dipped, that's about $50 a year less than what you might have paid. Big deal. It's still $500 more than BGE's rates before deregulation kicked in last July.

And unlike the period since last summer, you won't get a $50-a-month credit to numb the deregulatory pain. The General Assembly limited last year's proposed 72 percent increase to only 15 percent and required BGE to defer the difference. But on July 1 you get hit with the full bill and start repaying the deferral, at $5 a month more.(Deferral payback lasts 10 years. You can escape it by leaving BGE's territory, but what if you're just arriving and didn't benefit from deferrals? Tough. It's on your bill. Welcome to Maryland!)

The 10.6-cent "price to compare" for BGE's standard product after July 1 includes generation and cross-country transmission but not BGE's distribution fee, which you pay with any supplier. The price to compare may change slightly when July 1 arrives because the utility is still shopping for juice, but not much.

For a while it looked like alternative suppliers might handily undercut BGE's new prices.

We didn't get a repeat of Hurricane Katrina and energy-supply havoc last fall. A warm early winter depressed energy demand, and by New Year's the price of wholesale kilowatts for August delivery had taken a gorgeous, 18 percent dive from last summer.

But then it got cold, burning up natural gas that otherwise would have driven electricity turbines this summer. People began to worry that summer will be especially hot and that we'll have a bad hurricane season, which also raised prices.

At the same time, grid managers made it more expensive for kilowatt marketers to reserve generation capacity. And, inexcusably, the Public Service Commission, which is largely being replaced under new Gov. Martin O'Malley, didn't finalize crucial rules for competing in Maryland.

The rules have to do with whether rivals can use BGE's customer lists or share the risk of unpaid bills, and the uncertainty has caused at least one supplier to temporarily pull out.

"These rules, when they are put in place, will make a very good market," says Dan Donovan, spokesman for Dominion Retail, which recently quit selling to BGE households. "But now we have to wait until the new commission revisits the whole issue."

Obviously six years wasn't long enough for the PSC to get ready for deregulation.

The upshot is that rivals for BGE's standard product won't light up your life.

Washington Gas Energy Services (1-888-884-9437) offers a yearlong contract for 10.5 cents - basically the same price. Ohms Energy (877-646-7363) sells for 10.1 cents but says there may be a $4.75 monthly fee, which wipes out the measly savings.

Be careful with Ohms; I continue to get complaints from customers who signed up for one price and got billed for a higher one. Ohms CEO Sheirmiar White says the problems are limited to small portion of clients and are being addressed.

Commerce Energy's (800-353-2874) yearlong fixed price is 11.2 cents - higher than BGE's price to compare.

Commerce's variable product looks intriguing. It was 8.2 cents last week. But it swings with the wholesale market, and if costs soar so does your bill.

Commerce also offers an all-wind energy package, at 12.7 cents fixed for a year, which a spokeswoman says is more popular in Maryland than a cheaper, 50 percent wind contract. Pepco Energy Services' (703-253-1800) 100 percent wind deal is 12.51 cents for 11 months.

Energy consultant Bert Wilson thinks all prices might tick down in a month once the market digests the new requirements for capacity reservations, but it doesn't sound like the picture will be hugely different.

"The best thing for the masses to do is see who's making offers and probably take an offer toward the end of April, barring a disaster somewhere in the market," says Wilson, of South River Consulting in Baltimore.

Look on The Sun's Electric Shock blog for links to vendors and more information.

A few more things. Don't take the new deferral plan that BGE has proposed unless you really can't afford the July 1 increase or the deferral is substantially improved. (Hearings are next month.) It would delay the inevitable only until January 2008 and charge you 5 percent interest in the bargain.

For any contract you sign, watch out for nuisance fees and early termination charges. If you already joined an alternative vendor, your contract may expire in May or June; make sure it doesn't automatically roll over to a new deal you may not want.

And while you're at it, give the legislature a piece of your mind.

jay.hancock@baltsun.com

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