On January 1, 2011 electricity customers of the utility Connecticut Light and Power (CL&P) who are on default generation service will see their rates drop from the 2010 prices. Residential electric users who are still on default service will see their rates drop from $0.11051 to $0.0942 and small businesses will see a new rate of $0.10188 from the previous rate of $0.11723.
The lower rates are a result of the wholesale electric and gas markets dropping over the last year. CL&P buys their power for their default customers on intervals. A portion of the default rates were bought when wholesale prices were higher than they are today. This means that electricity customers in Connecticut can still get an even lower rate than the new 2011 CLP default rates.
MX Energy is currently offering a 6 month rate of $0.0899 for residential customers.
Connecticut Commercial electric rates below $0.095 can be found here.
So far 32% of CL&P residential customers have switched off of default service and are using a competitive electric supplier. 54% of small businesses in the area have found more competitive electric offers.
Business Customers being served by one of the Connecticut Utilities (CPL, UI) are given many options now that the Connecticut electricity market has been fully deregulated. Most offers that come from certified retail electric providers involve a certain fixed price per KWh set for a certain term.
Another option that exists for businesses is a floating wholesale index rate. The index rate allows business customers to buy power for the posted wholesale electric price plus a small retail adder by the retail provider. These rates have averaged below $0.09 per KWh compared to utility default rates of $0.1247 (28%) and competitive fixed rates of $0.105 (14%). The wholesale index prices for Connecticut are posted and updated in real time at http://www.iso-ne.com/ which is the Regional Transmission Organization for New England. The retail adder amount would be stated in a contract between a retail electric provider and the business customer.
Many large businesses who have the resources to educated themselves on all the benefits of electricity deregulation have been using index pricing to their advantage for several years. Small and medium size businesses have the option to use index pricing as well with many of the competitive suppliers, however most suppliers do not spend time marketing the product because they feel that it will be too complicated for the average small business owner to understand.
If you are a small business owner who would like more information on index pricing, leave a comment on this article and we can provide you some literature and historic numbers on index wholesale electricity pricing.
