Lower electric rates are available for Atlantic City Electric (ACE) customers who are on the utility’s default price to compare rate. Commercial and industrial electric customers can save a modest 10-15% off their current rates by signing a fixed contract rate with a competitive alternative electric provider.
Depending on the rate class and usage patterns, ACE business customers are currently paying a default rate between 10.77-12.15 cents per KWh http://www.atlanticcityelectric.com/business/choice/nj/compare/.
Competitive rates in the region are being locked in for 12-36 month terms at rates as low as 9.7 cents per KWh. Shorter term contracts are also available for those consumers who want to save money right away in the summer, but wish to wait and see where the long term default rates are heading.
South New Jersey electric customers can save money on their electricity bills by getting off of the high default rates and shopping the competitive market.
Contact us for more information about electricity deregulation.
With many electric deregulated markets seeing true market participation by suppliers and users for the first time, consumer questions and concerns are on the rise. Used to paying electric rates set and monitored by the state, electricity customers are skeptical and uneasy about their introduction to fixed electricity rate contracts.
Consumers hear the word “contract” and they panic. The are comparing it to their cell phone contracts where they have been burned in the past with hidden charges and lengthy obligations. However, the comparison of electricity contracts to cell phone contracts is not a fair one. The invasion of cell phone use lead to a variety of company and product options for consumers that resulted in a better quality of life (though some will argue that). When a consumer went to purchase his first cell phone, he chose to buy a new product that would provider certain convenience factors in his life.
In many of these new electricity markets (Connecticut, Pennsylvania, Maryland, Delaware) default rates by the state have been set for the year. Competitive electric suppliers are often able to offer fixed rates for the entire year that are much less than these default rates. The original utility in these markets continue to bill the customer. The only downside to entering a fixed contract is that you are committing to using the alternative supplier for the contract term. However, that “downside” is actually a benefit as it guarantees that your rate will be lower than the default rate for the entire year.
To combat the “contract fear” many electric providers offer a variable monthly rate with no commitment. People feel good about the fact that there is no commitment, but their service provider is now free to charge them whatever they want. The fixed contract gives the customer price protection; they will know exactly what their rate will be and exactly how much they are saving versus the default rate.
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.
