Electric choice

February 21, 2010|By Liz F. Kay | liz.kay@baltsun.com

Howard County resident Mark D. Case saved a bundle by dumping Baltimore Gas and Electric Co. and signing on with an alternative electricity supplier. He points out that residents could save about 10 percent or more by doing the same.

He should know. He's a top executive with BGE.

"It's still one of the best-kept secrets in Maryland, and that's unfortunate," said Case, the company's senior vice president of strategy and regulatory affairs.

Maryland deregulated the power business more than a decade ago to allow residential and commercial consumers to sign contracts to lock in lower electricity prices with an alternative supplier, potentially cutting their monthly bills. But for years, residential consumers had few options other than the utilities, and few switched even after rate caps were lifted in 2006, making it easier to find better deals.

That trend appears to be changing, albeit at a glacial pace.

Only about 5 percent of the 1.1million residential customers in BGE's service territory in the city and surrounding counties had switched to an alternative supplier as of December. While that's double the percentage that had done so at the beginning of 2009, it's still only a sliver of the residential market. In contrast, nearly a third of commercial and industrial customers have opted for an alternative supplier.

More residents are expected to shop around as more suppliers have entered the market and as programs are put in place to encourage consumers to examine their options. Other possible factors behind the newfound urge to shop for electricity: the long, cold stretches that led to bigger utility bills last winter, a faltering economy that has prompted more budget scrutiny or the desire to get power from environmentally friendly energy sources.

BGE Home, owned by BGE parent Constellation Energy, announced in January that it would start offering contracts, and Dominion Retail recently revived its alternative service in Maryland. BGE, which makes its money by distributing electricity, no matter who supplies it, also ran TV ads about electric choice last year.

Several bills before Maryland General Assembly seek more consumer education about electric choice. One proposal announced last week would have the state Public Service Commission, which regulates the power industry, create public service announcements and a user-friendly Web site about electric shopping, and require that utilities inform residents about their options.

Fewer than half of the Maryland respondents in a recent poll knew they had the option to shop around, according to a survey commissioned by the Retail Energy Supply Association, an alternative supplier organization.

Unlike utilities, which spread out energy purchases to protect against sudden spikes, alternative suppliers can take advantage of market lows and offer cheaper rates.

Going with an alternative supplier also lets customers choose products that use electricity generated by wind — although they may pay more for that option. In addition to Clean Currents, more than 10,000 Washington Gas and Energy Services customers in Maryland and surrounding states have contracts for wind power, said Leah Gibbons, the company's director of regulatory and legislative affairs.

But what should residential customers keep in mind when entering a contract?

Paula Carmody, head of the Office of the People's Counsel, which represents consumers' interests before state utility regulators, said ratepayers should check the Maryland Public Service Commission's Web site to see which suppliers are licensed in this state.

The People's Counsel site also maintains price comparison information, so consumers can find out what different suppliers are charging. To see if you're getting a good deal, compare the offers with prices from your local utility. Ensure both numbers are using the same units of measurement, such as kilowatt-hours.

Carmody added that ratepayers should review contracts carefully, just as they would with any other purchase or service contract, and the People's Counsel has a contracting guide available on its Web site that can help. Most contracts last as long as 12 or 24 months, and Maryland's suppliers often charge early termination fees of as much as $150 or $200 if customers cancel before the term is over.

And many of these contracts automatically renew — at whatever rate is available at the time, which could be higher or lower. "This is something people really need to watch out for," Carmody said.

Suppliers must send a notice about to customers at least 45 days before the contract renews, but if the consumers don't take action, the contract continues. "It is very important that people keep in mind that this is going to be coming to them, and don't throw it away," she said.

Here are some other important information to know:

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