Switching electric suppliers? You're not alone
With CL&P rates set to drop early next year, a third of major utility customers have switched to alternate suppliers and reduced their monthly bills.
The number of electric customers in Connecticut who have switched to an alternative supplier at a cheaper rate has more than doubled in the past year.
More than 550,000 customers - or 36 percent of Connecticut's total residential and business market - have chosen an electric supplier other than the state's two major utilities, Connecticut Light & Power and United Illuminating, according to Kevin DelGobbo, chairman of the commission that oversees the state Department of Public Utility Control.
Last year, the figure was 15.6 percent. The measurement was calculated as of Oct. 31.
What's more, CL&P rates are scheduled to drop by about 6½ percent in January, pushing the competitive pricing from alternative suppliers even lower, and making room for even more growth ahead, DelGobbo said in a wide-ranging phone interview this past week.
CL&P and UI deliver electricity and purchase contracts from suppliers to provide electricity, but they do not generate their own electricity.
CL&P customers paying $141 a month this year for an average household bill based on 700 kilowatt hours will see their bill drop to $125 in 2011, he said. (Those figures represent the generation charge, delivery charge, taxes and fees.) If they switch to an alternative supplier that is truly competitive, they could pay even less, he said.
"The good news is that the marketplace itself has reached critical mass," said DelGobbo. "When you're a household and you think, 'I've got to think of every single penny,' well, there are many, many pennies, in fact, many dollars a household can save every month" by switching to an alternative supplier.
The alternative
To put it in context: To date, alternative suppliers like Dominion Retail or Direct Energy, to name a few, provide more than half the entire electric load purchased in the state (not including municipal utilities), DelGobbo said.
"Our estimate is, it's a $1.5 billion industry in Connecticut," he said. "Last year, Connecticut residents saved in the aggregate $250 million. That's a lot of jobs and money saved."
Of the 36 percent who have switched, most of the state's large businesses (about 90 percent) and 50 percent of the state's small businesses have done so. The rest are residential, DelGobbo said.
In talking to his counterparts in other states, DelGobbo said he has learned that Connecticut "is looking to be the only state in New England where there'll actually be a reduction" in rates. "All the other states are looking at staying where they're at."
Prices from alternative suppliers can vary by several cents a kilowatt hour, saving residential and business customers money either with fixed or variable plans.
Right now, CL&P's standard rate for residential service is just over 11 cents a kilowatt hour through Dec. 3. That reflects a monthly cost of $77.36 for electric generation alone (and does not include all the other fees and charges).
Estimated savings range from a low of $1.83 a month with a variable plan at just over 10 cents per kilowatt hour with Viridian to as much as $17.93 a month through Nov. 30 with a fixed plan with ConnEdison Solutions, which charges just over 8 cents a kilowatt hour.
Dominion Retail, the first company to enter the Connecticut marketplace, is competitive, charging between 8 and 9 cents per kilowatt hour, for a possible savings of $16.53 a month in both fixed and variable plans.
Electric restructuring
"We consider Connecticut one of our core markets," said Dan Donovan, a spokesman for Dominion Retail, which markets itself through the company Levco.
Restructuring, which allowed switching suppliers, has been a long road, with Northeast Utilities selling its generation plants and the nuclear reactors at Millstone Power Station a decade ago to Dominion Nuclear Connecticut, a subsidiary of Dominion Resources of Virginia.
DelGobbo attributes the emergence of alternative suppliers and the increase in customers switching to them primarily to the "sticker shock" in 2006-2007 when CL&P and UI contracts, which kept rates artificially low after restructuring, expired.
"There's also been a significant shift in psychology," he said. "We've all felt the pain of electric rates and as time goes on, all of us are more and more willing to say, 'Well, what else is out there?' And that's a big threshold, because a lot of people are inherently skittish. You're understandably nervous about a commodity as important as electricity."
The DPUC continues to regulate public service companies like CL&P and UI, and AT&T, but does not regulate the alternative energy suppliers and their aggregators, or marketing agents.
Nonetheless, the agency is overseeing industry best practices to help prevent slamming and other abuses among the dozen or so alternative energy suppliers, DelGobbo said. (Slamming is when companies switch a customer's supplier without their knowledge.)
"We don't tell them what to charge, but we do license suppliers and register aggregators, looking closely at the distinct relationship or definition of what an agent/broker/aggregator and supplier would be and what an appropriate code of conduct should be and how to provide appropriate oversight," he said.
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