Every day brings a new entreaty in the mail: Switch to this company and save on your electricity bill.
Yes you can and yes you might.
Since August 1999, you’ve had the right to choose your electricity company. Sort of. While only New Jersey’s traditional energy companies can bring power into your house, any company can create power and you can buy it. For the last decade, big businesses have been switching to independent power generating companies in droves: According to data from the New Jersey Board of Public Utilities, 75.1% of big businesses have switched, while only 4.3% of PSE&G’s residential customers have.
When energy was deregulated, the independent power companies went after big users first. Now, you’re being courted, through direct mail and, increasingly, in person. One of the independents, Viridian Energy, works by selling through affiliates, who stand to profit if they convince someone to sign up. The Verona PBA Local#72 is a Viridian affiliate, as is the Verona Rescue Squad; so is Nick Frank, a Verona resident who runs ADP Insurance in Bloomfield. The affiliate makes about $2 a month on a residential account.
So how does buying electricity from an independent save you money? It’s more than just the lower overhead that comes from not having salespeople on the payroll. PSE&G buys one-third of the energy it needs every year through an auction; its total energy cost for any one period is the average of three years of buying. The independents buy their power on the so-called spot market,which has benefited more quickly from falling prices for natural gas, which powers a chunk of the electricity created in our area.
PSE&G power costs have also been falling, however, which is narrowing–and, in some cases, eliminating–the advantage that independents had had. Electricity cost PSE&G $0.11328 per Kwh at its 2008 auction but just $0.09528 per Kwh this year, which means that a typical residential PSE&G customer will save about 3.5% a month now over his previous PSE&G bill.
With the multitude of independents clamoring for our business–this week’s mail contained offers from NextEra Energy Services, Gateway Energy Services, EnergyPlus, Constellation Energy, and IDT Energy–it’s not always easy to make comparisons between them and PSE&G prices. Some offer fixed-rate pricing, like PSE&G, but on contracts that can range from six to 24 months with equally wide terms. Some offer variable pricing that could give you a great rate one month and a not-so-great rate the next. And while the independents all seem to quote PSE&G’s prices with all the taxes figured in, they don’t always do the same for their own prices. The savings can take three months to show up on your bills and there are also often termination fees, which you don’t have with PSE&G. New Jersey’s Board of Public Utilities has a shopping guide to help you understand some of the factors to consider.
One thing that’s not on the BPU guide: Many of the independents tout their usage of renewable energy, some of which can seem to be greater than PSE&G, which counts 7.43% renewable energy in its portfolio. The utility, however, does not include in that calculation nuclear energy, which accounts for 42.90% of its sources and, depending on your perspective, is fairly green.
Of course, if you want to be guaranteed savings, there may be an easier way than all this comparison shopping: Buy the most energy-efficient appliances you can and turn off all the lights, TVs, gaming systems and yes, even computers when you leave the room.
