Savings can be had on electricity

March 21, 2009|By JAY HANCOCK

Shopping for household energy has revived in Maryland, thanks to a drop in wholesale prices, frustration about BGE's winter heating bills and worries about even higher electricity prices to come.

Residential users who dump BGE's or Pepco's standard electricity package could save $20 a month this summer by buying energy instead from merchants such as Washington Gas Energy Services or a program being rolled out by several chambers of commerce. Natural gas prices have plunged, too. (I'll write more about them in Wednesday's paper.)

The electricity savings aren't huge, but there's no reason not to take them. Until policymakers fix flawed wholesale markets and increase Central Maryland's kilowatt supply, it's at least temporary self-help. There has also never been a better time to buy nonpolluting, wind-generated electricity, which has become cheaper than BGE's standard price for the first time.

If you're mad about the sticker price from BGE and its suppliers, start shopping around.

Thanks to deregulation, Baltimore Gas and Electric Co. and Pepco no longer own generators but buy power in the wholesale market.

The idea behind deregulation was that independent vendors would buy their own kilowatts, undercut the utility's "standard offer" price and resell them to BGE or Pepco customers. (BGE or Pepco is always your utility, but the suppliers sending juice through their wires can change.)

While this has worked for business customers, the residential deals have rarely been any good. Thanks to state regulations, however, BGE and Pepco locked up much of their 2009 and 2010 supply at very high, 2008 prices. BGE's standard price for summer will be even worse than the prices causing pain this winter. So now independents are buying at recession-depressed levels and making better offers.

"The market now is just tremendous," said Richard Anderson, managing principal for Columbia-based CQI Associates, which is reselling household electricity through chambers of commerce. "We're seeing prices go even lower. And I think we're going to be seeing this, I would say, for six to eight months."

It's not that tremendous for consumers. Mid-Atlantic-wide juice prices (for July delivery) have fallen by more than half from last summer's peaks and 30 percent from their average the past few years.

But you won't see those kinds of savings even if you switch, partly because juice is only part of your electricity bill (you also pay for long-distance transmission and local delivery, which haven't declined) and partly because supply constraints have kept prices relatively higher in Central Maryland.

Even so, it's easy to do better than BGE's or Pepco's standard price, at least now.

The standard BGE price will hit 12.7 cents per kilowatt hour for June through September. (This includes transmission but not distribution, which adds about another 2.4 cents.) For Pepco it'll be 12.8 cents. Those are all-time highs and substantial pops even from what the utilities have been charging this winter.

Why not switch to WGES (888-884-9437), which will sell you electrons for 10.8 cents and let you lock in for up to three years? For a typical household, that'll save $19 a month for BGE customers and $20 for Pepco users, at least for this summer. That's net savings even after you pay for delivery and transmission. Anyone in BGE or Pepco territory can sign up. If you use more than 1,000 kilowatt-hours per month your savings will be greater.

For BGE customers, Dominion Retail (866-275-4243) offers a slightly lower price - 10.75 cents, a spokesman says. But you can lock in only until the end of this year. CQI has secured contracts as cheap as 10.25 cents, Anderson said, but it's only signing households affiliated with the Pikesville Chamber of Commerce (employees of chamber members, for example), the Howard County Chamber and others. Check with your chamber to see what's available.

Maybe the best deal from society's standpoint is from Clean Currents (301-754-0430), which offers 100 percent wind energy for 12 months at 11.5 cents. Wind, which avoids the pollution and carbon emissions of traditional coal-fired plants, has traditionally been much more expensive than dirty energy. Not now. You can lock in for two years of wind at 11.8 cents.

BGE and Pepco have finalized standard prices only through September, but households that switch for the next 12 months will almost certainly save money the whole time. WGES projects standard utility prices will be about 12 cents for October through next May, down slightly from summertime but still higher than alternatives. Since BGE and Pepco have already bought most of their electricity for the period, that sounds about right.

"We're pretty convinced that the rates we're offering right now are going to hold up pretty favorably for the following year," says WGES President Harry Warren.

Beyond that it gets hazier. Utilities have bought some but not all electricity for 2009 and 2010, so it's unclear what their default price will be.

But buying juice at 10.8 cents from WGES from now until 2012 looks like a pretty good deal. You're saving money now, and you'll be protected if the economy revives and energy prices again soar.

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