Money Saving Mondays: Electricity Suppliers - NECN
Money Saving Mondays

Money Saving Mondays

TIPS AND ADVICE ON SAVING AND GETTING THE MOST FROM YOUR MONEY

Money Saving Mondays: Electricity Suppliers

On top of everything else New Englanders have had to bear this winter, electric rates are now in many areas of Massachusetts and the region the highest they’ve been in a decade

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    NEWSLETTERS

    Soaring rates have competitors offering savings promises – but beware of pitfalls and fine print (Published Monday, March 16, 2015)

    On top of everything else New Englanders have had to bear this winter, electric rates are now in many areas of Massachusetts and the region the highest they’ve been in a decade.

    And that has alternative home electricity suppliers more visible than they’ve been in years, advertising on radio, on billboards, and on direct mail with promises to save you money.

    It’s a trend that’s caught the eye of Massachusetts’ top law enforcement officer and consumer protection chief, Attorney General Maura Healey. “Customers have really been hit with their electric bills and utility bills, so with that has been more and more competitive suppliers, coming forward, soliciting folks, trying to get them to change over,” Healey said.

    The backdrop for homeowners are “basic service” six-month fixed rates that jumped in Massachusetts by 37 percent at National Grid on Nov. 1 and at NStar, now EverSource, 29 percent Jan. 1.

    With competitive suppliers, you still pay the utility to deliver you electricity. But you switch from paying the utility’s “basic service” fixed or floating rate for the cost of the power you use to buying that power from another company. Con Edison Solutions, Constellation, Gulf Electricity, Massachusetts Gas & Electric, Provider Power, and SparkSource are just a few of the companies competing with National Grid and EverSource to sell power to homeowners. You can find a full list here.

    One of the most common deals on offer is a 12- or 24-month fixed-price electric rate, with or without fine print, at a price that’s typically less than the current winter rates for National Grid and EverSource. But, Healey said, “It's all about: Buyer beware. Be careful of what it is you're getting and signing up for.”

    The price a competitor is charging for power now may be well below what Grid and EverSource charge when their next rates are set April 1 and July 1. “Come summer, people are going to see their rates drop, so you don't want to find yourself on the hook for a year-long contract where, come summer, your rate would have dropped already.’’

    Because of complicated issues relating to gas supply and competition between power plants and home heating utilities for a constrained supply of gas coming into New England, National Grid’s per-kilowatt-hour fixed rate basic service price soared to 16.3 cents this winter. That is by far the highest it has been in a decade, 30 to 40 percent more than the winter rates it’s charged in prior years, and close to double the summer rates of many years.

    One problem Healey said her staff has repeated seen are “teaser rates” that give you a 30- or 90-day discount from current utility prices, only to soar after the introductory period ends. “Stay away from teaser rates,” Healey said. “They're always a problem for consumers. They lure you in with a teaser rate that sounds good, only to see that explode in time.”

    And there are some shady operators out there. Just Energy Group Inc., for example, just paid $4 million to settle “deceptive marketing” charges with Healey’s predecessor, Martha Coakley, whose prosecutors alleged Just Energy used door-to-door salesmen and high-pressure telemarketers who promised bogus savings and sometimes even signed people up without their OK.

    “Not all competitive suppliers are bad actors -- I don't want to suggest that,” Healey said. “But folks have got to be careful … Beware of competitive suppliers who may be looking to trick you into what sounds like a better deal, but in the long run, isn't.”

    For some people, knowing with certainty what you’ll pay for electricity for the next 12 or 24 months may have some value, even if you wind up paying more than you would sticking with your utility. Some consumers who have timed the market right may indeed score some savings.

    But it may be worth thinking about this: If you feel certain you can predict what utility electric rates and spot-market energy prices will be over the next year, you’re aren’t just qualified to decide whether to switch to a competitive electric supplier – you could go to work as an energy trader and make millions. For a lot of other consumers, the boring but safe option -– with a far lower downside -- may be to go with the rates utilities negotiate and regulators approve.

    With video editor Lauren Kleciak and videographer Daniel J. Ferrigan.

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