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What About Selecting a Different Energy Supplier?

Posted: October 28, 2011

Be sure to read the fine print!

By this time, you have probably been inundated by requests to select Company A, Company B, or Company C as your electricity supplier.  And, of course, each supplier makes it sound like this is a golden opportunity for you to save lots of money if you make the right decision before a deadline date that is generally rather soon.

The devil is in the details! Be sure to read the fine print. Every solicitation that I have seen has a cancellation fee if you cancel before the expiration of the contract. For me on a residential account, the penalty fee would be $150 if I cancel before December 31, 2013. I spoke with a dairy farmer several weeks ago on this topic and I asked him to search for his cancellation fee in the fine print. For his case (a commercial account), the cancellation fee was $1,800.

Keep in mind that if you select a supplier of electricity, you will still be connected to the same utility company that you have been before deregulation. Your local utility company (Duquesne Power, Met-Ed, Penelec, Penn Power, PECO, PPL, West Penn Power, or any other) will continue to charge you for the distribution of your electricity. There will be no extra wires (or different wires) bringing the electricity to your farm if you select a different supplier. Your supplier (if you select one) will be responsible just for the generation of your electricity and for the transmission of the electricity to the power grid. Your local utility company will be responsible for distribution services, including billing, customer service, and power restoration after storms and accidents.

If you do not select a supplier, then your local utility company will continue to supply your electricity in addition to providing the distribution of your electricity. In other words, your local utility company will be your “default supplier” or your “provider of last resort” if you do not choose a supplier.

Before you start shopping for a supplier, make sure you know how much you are paying for your electricity now. If you look at your bill, you will find the “Price to Compare.” This price is the amount you are paying now to the local utility for the generation and transmission of your electricity. The price to compare is NOT the total cost of your electricity. When you shop competitively for a supplier, you need to compare your “price to compare” with each supplier’s price for generation and transmission. That is the only way that you will be able to make an “apples-to-apples” comparison.

When contacting suppliers, the questions that you should consider asking include:

  • How much will the electricity cost per kWh? Is it a fixed rate or a variable rate?
  • Is there an option for on-peak/off-peak rates? If so, what are the rates? What are the on-peak and off-peak periods?
  • Do the quoted prices for electricity include the transmission charges?
  • Do the quoted prices for electricity include PA sales tax, gross receipt taxes, tax surcharges and any other levied charges?
  • Are there any additional charges such as origination fee, minimum monthly charge, service charge, or termination fee?
  • Do I have the option of one combined monthly bill or separate bills from my supplier and my local utility company?
  • What is the length of the contract period? What is the penalty for early termination? Under what circumstances can the supplier terminate the contract?
  • How can I make my electricity account more attractive to get more desirable terms?
  • Is “green” electricity available?
  • What additional goods and services can be provided, such as heating fuels, HVAC equipment and maintenance, on-site generation equipment and maintenance, energy efficiency consulting services and financing?

Who are the suppliers that are licensed to sell electricity in your area? Go to this web site. Suppliers are identified for residential customers and for commercial/industrial customers in the region of each local utility company in the state. Check the list frequently since additional suppliers are often added.

I have given presentations on this topic of selecting an electricity supplier through Penn State Extension and I am very interested in giving additional presentations. Please contact Penn State Extension in your county or district to arrange such a program or contact me.

By Dr. Dennis Buffington, professor, Department of Agricultural and Biological Engineering