Power: Same old thing best deal

April 23, 2008|By JAY HANCOCK

Jennifer and Rob Brewington of Glenwood switched to an alternative electricity supplier two years ago, saved a few dollars and figured they would renew when the deal expired in June. That was before they checked the details.

"It looks like they're raising the rates," says Jennifer Brewington. "Because they were slightly more reasonably priced than BGE back when I signed up with them, I thought they might continue to be."

But the new offer, from Washington Gas Energy Services, was about 17 percent higher than what Baltimore Gas and Electric's standard, electric-supply price will be after June 1. The Brewingtons canceled the WGES deal and went back to BGE.

Which might be a good idea. Because BGE locked up most of its electricity supply for this year months ago, when prices were lower, rival suppliers such as WGES and Commerce Energy are having a hard time undercutting it.

Unless you're dedicated to "green" energy and willing to pay a big premium, the best deal for the rest of the year is likely to be BGE's basic offering. Take that and Gov. Martin O'Malley's $170 electricity rebate as small consolation in a brutal market where the promise of deregulation - that "electric choice" would benefit consumers - is still unfulfilled. If your best move is the same old product from the same old utility, you might have a deregulation problem.

To be sure, BGE's standard price is rising too - by about $4 per month for a typical house. But residential electricity offers from alternative vendors would cost the average family $20 or more a month on top of that.

Alternative vendors aren't even trying very hard. BGE lists only six certified suppliers, and some don't have current offers. By contrast, more than 20 companies are trying to sell power to Maryland businesses. In Texas, where residential electricity competition has taken off, households have dozens of choices.

"People are very leery about committing to the market for residential customers" until the Public Service Commission and other policymakers decide what the regulatory landscape will look like, said Leah Gibbons, a Reliant Energy executive and Maryland chair of the Retail Energy Supply Association, which represents independent vendors.

"You still have an awful lot of uncertainty, because it's not clear what the commission is going to do."

Many contracts from alternative vendors expire in the next month or two. Some, like the Brewingtons' WGES deal, automatically renew unless you cancel. Make sure you tell the outside supplier if you want to revert to BGE's standard fare.

Last year, people worried that BGE was buying high when it procured juice for June and beyond. But what was painfully expensive a few months ago is better than what is really, really expensive now.

Rising costs for natural gas, coal and other generation fuel have helped push wholesale electricity prices up 20 percent in recent months. But BGE's standard price for generation and transmission (the "price to compare" for shopping around) is going up only about 4 percent starting in June.

This summer, BGE's generation and transmission price will be about 11.8 cents per kilowatt hour, says Wayne Harbaugh, the company's manager of pricing and regulatory services, up from last summer's 11.39 cents. (You pay another 3.4 cents for delivery on top of that. Summer prices are typically higher than non-summer's.)

Meanwhile, WGES offered to renew the Brewington's contract for six months at 13.8 cents per kilowatt hour. (Five percent of the energy comes from wind and other "clean" sources.)

Commerce Energy will sell BGE households electricity for a year for 14.8 cents a kilowatt hour. Pepco Energy Services and WGES sell 100 percent wind-generated electricity for a little less than 16 cents per kilowatt hour. (To see a list of suppliers and prices, go to baltimoresun.com/hancockblog on the Web.)

BGE's prices won't last forever, of course. But the utility has bought all its electricity through September, 75 percent for the balance of the year and a substantial amount for next year. That'll hurt households if for some reason wholesale prices plunge (unlikely). But it'll help if prices stay high or go higher.

"Help" is a relative term, unfortunately. BGE households are paying something like 85 percent more for electricity than they were three years ago. BGE will be buying electricity for future years at probably even higher prices.

The wholesale electricity market, which has held Maryland hostage since deregulation allowed BGE to transfer its power plants to parent Constellation Energy, is rife with problems. It is conducted in secrecy. It gives Constellation a near monopoly in metro Baltimore. It inflates prices to pay for plants that never get built.

While policymakers figure out what to do, your only viable electricity choice seems to be to stick with the same old product. And use less of it.

jay.hancock@baltsun.com

ONLINE

Find Jay Hancock's blog on business news at baltimoresun .com/hancockblog

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