Residents of 14 states and Washington, DC, have the right to buy electricity from a supplier other than their local utility, and that could save them $100 or more per year. But you must ask the right questions to make sure that you are getting the best deal, including sign-up bonuses and/or monthly frequent-flier program points in some cases. The deregulated states are Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Ohio, Pennsylvania, Rhode Island and Texas.* What you need to know…
Customers continue to pay the local utility to deliver power, but they can opt to pay a different company to generate power and put it onto the power grid on their behalf. This alternative power supplier might be a utility in a different region or, more often, a company that buys power wholesale, then resells it.
Customers receive exactly the same electricity as before, no matter which supplier they choose.
Example: If you opt to buy power from a “green” supplier, a solar, wind or hydroelectric facility will add power to the grid — but the current that actually flows through your home will not necessarily be produced that way.
Customers still call the local utility if a tree knocks out power lines, and they often still qualify for any energy-efficiency discounts and rebates, such as those you might get for buying an energy-efficient appliance. In some states, customers who select an alternative supplier pay this supplier directly, by check or online transfer, but in other states, they simply continue to pay their local utility, and this utility sends a portion of the payment to the alternative electricity supplier.
SELECTING A SUPPLIER
If you live in a deregulated state, go to the Web sites of your state’s Public Utility Commission (www.naruc.org/commissions.cfm) and Utility Consumer Advocate (www.nasuca.org). Licensed alternative electricity suppliers likely will be listed.
Contact alternative electricity suppliers directly to confirm their current prices per kilowatt hour (kWh) before signing up. Compare their prices with the price per kWh you now are paying, which should be listed on your most recent electricity bill. Also ask…
How often can this rate change? Some rates are fixed for up to a year, but others vary month to month.
Helpful: This could be a smart time to lock in a fixed rate if that’s an option, because the weak economy has somewhat reduced prices.
Is there a cancellation fee? Some suppliers charge fees to customers who don’t stay for a preset period.
Are there any other fees, charges or minimum monthly purchase amounts? Examples: Some suppliers charge a sign-up fee or a fee for paying by paper check rather than online.
Is there a sign-up bonus? Some suppliers offer cash or gifts to induce new customers to join, but don’t overvalue these bonuses.
*Some states have few or no alternative electricity suppliers, even though they have deregulated or they have deregulated only certain regions.