Performing an energy price comparison among different energy companies and their offers is not always as simple as it may seem. If you are shopping for competitive energy prices you may not always get apples to apples rate comparisons, especially if you are doing electric rate comparisons for a business.
Increasingly competitive energy suppliers are finding creative ways to structure their rate offers which makes customers appear to be signing contracts for unrealistic low rates, when in truth the contract has many additional charges that show up on the electric bill.
In order to protect customers, New Jersey and Pennsylvania post their “Price to Compare” rates which are the default rates offered by the utilities that competitive suppliers are supposed to offer their rates against. Most people understand that with electric choice, the bill is now divided into two sections: the competitive supply section, and the regulated delivery section. The “Price to Compare” rate that utility companies (PP&L, PECO, PSE&G, JCP&L) publish are the entire supply component of the bill.
The supply rate for energy is broken down into more smaller components. Some of these charges, such as transmission and capacity, will often be displayed on the bill. Other components, such as line losses and congestion fees, are charges that are not stated on the bill but are blended into the price to compare rate. However, competitive suppliers will take out these charges and present their rate to a customer that only contains the energy commodity. The remaining charges will show up when the customer receives the bill.
This practice makes offers seem significantly less than the utility price to compare. Unfortunately, often when the bill shows up those extra charges push the rate well above the default price to compare.
It is important to understand that in most energy choice markets, business customers can save money on their bills through shopping and comparing offers. However due diligence needs to be done and the contracts read. If your staff is unable to do this themselves they should consider working with an energy consulting firm or use a electricity comparison site that presents all offers equally against each other and against the utility’s current price to compare rate.
Here is some information on specific price to compare rates:
PPL: The price to compare includes the energy rate and transmission rate that are posted on the PPL website. The rates also include a GRT tax that is 5.9%. Current PPL commercial rates increased by 33% on June 1.
PECO: The price to compare includes the energy rate and transmission rate that are posted on the PPL website. The rates also include a GRT tax that is 6.06%. PECO commercial rates will increase by 9-11% on July 1. PECO residential rates will increase by an average of 10% on July 1.
PSEG: The official term for the price to compare in New Jersey is Basic Generation Service (BGS) rate. The BGS rate for PSEG businesses is a little complicated because they use different measurements for different charges. They charge a per KWh rate for energy commodity, and then a dollar per KW demand for transmission and capacity. This causes the total BGS to change slightly from month to month. To get an overall idea of what your BGS default rate is, take your total supply charge and divide it by the total KWh amount for that month. All of this is stated on the bill. Then you can compare competitive rates against the total BGS rate to see what type of savings are available. Keep in mind that BGS rate include a 7% NJ tax.
JCPL: The official term for the price to compare in New Jersey is Basic Generation Service (BGS) rate. The BGS rate includes energy and transmission charges.
