Shopping around for electricity can pay dividends
Jun. 3—Here's a jolt for those of you who don't think it's worth your while to comparison shop for electricity rates in Connecticut: In April, state consumers saved themselves more than $15 million by choosing an alternate to Eversource Energy.
That's according to the Office of Consumer Counsel, and it's not just a one-time statistic. Every month that people receive bills from so-called third-party suppliers, they save on average more than $70 on the electricity supply side of their bills, according to the state agency, and that has meant over a one-year period dating to last May an aggregate savings of $69.3 million for all state consumers.
John and Dorrie Hughes of Waterford are two of those people, and now their three grown daughters are saving as well. The Hughes family checked out the EnergizeCT website to determine the lowest-cost supplier and wound up with Constellation Energy, saving an estimated $100 a month compared to what they would have faced with Eversource's rate hike that started early this year.
"We'd heard the local news talking about our governor trying to negotiate lower rates after Eversource and United Illuminating announced a significant hike in their rates," Hughes said in an email. "Price was my motivation, especially since we use electricity for heat and AC with our Mitsubishi heat pump system and also for our electric hot water heater."
Hughes said he currently saves about 8 cents a kilowatt hour, or 30%, on electricity supply costs compared to what Eversource is charging. But this is about to change as Eversource recently announced a drastic cut to its supply charges based on the lower cost of energy now compared to last year at the start of the Russia-Ukraine war.
Last month, the state Public Utility Regulatory Authority announced that on July 1 the typical rate on Eversource bills will be reduced by 22% through the end of the year. This largely reflects lower costs for natural gas, which is the main component of Connecticut's power grid.
"However, a customer's total bill may increase or decrease depending on individual energy usage each month," PURA said in a release.
Still, the Eversource standard rate will be reduced to 13.8 cents per kilowatt hour, down from 24.2 cents in the first half of the year. But prices for transmission and distribution of electricity are going up, so the reduction on consumer bills will not be as robust as customers might have received otherwise.
The net effect will be a monthly savings of about $73 for the typical Eversource customer on the "supply" side of the bill through the end of the year, according to the Office of Consumer Counsel. But the "delivery" costs are increasing about $16.50 a month, for a net savings averaging about $56 monthly for Eversource customers.
The delivery cost increase largely results from the expiration of a credit related to the state's contract with the Millstone power plants in Waterford, according to the consumer counsel.
The "supply" portion of electric bills are adjusted twice a year, reflecting the market price for wholesale electricity regionally. It's only on this side of the bill that consumers can find savings; the distribution side is a fixed cost that everyone must pay, regardless of their energy supplier.
"Connecticut usually has lower rates during higher usage summer months and higher rates during lower usage winter months," according to a consumer counsel alert sent out May 22.
About four out of every five Eversource customers go with the standard rate, which is almost always higher than what consumers could find on the open market, according to Claire E. Coleman, the state consumer counsel. Her office's analysis shows that about 90% of consumers who choose an alternative supplier are paying less than Eversource customers.
Coleman, in a Zoom interview, said the high rate of people sticking with Eversource reflects the fact that the standard service rate had been better than third-party rates for quite some time until the most recent doubling of costs in January. Also, some of the third-party competitors had turned out to be "bad actors," she said, noting there is a "risk component" in choosing an alternate supplier.
"Consumers are sort of wary," she said.
According to a May analysis of electricity charges, the most recent rate for Town Square Energy is about 17% lower than for Eversource, and that was the cheapest rate around as of May 24.
"Third-part supplier rates are sometimes for longer periods than the utility's standard service rates," according to the analysis, which urges consumers to "review all contract terms vigilantly" and check for changes in rates each July and January at www.energizect.com.
PURA, on its website, urges customers to start comparison shopping about Nov. 15 for the new rates that go into effect for January.
Coleman, the consumer counsel, noted that third-party suppliers of electricity must offer rates that last at least four months, and they cannot charge sign-up fees or teaser rates. Also, no early termination fees are allowed, giving Connecticut customers a lot of power to bow out of their contracts early to seek better rates.
"In Connecticut, consumers are in a unique position," Coleman said. "The savings have been significant (using third-party suppliers) ... and we wanted consumers to be aware of them."
The Hughes family said trying to make the best decision about a supplier is time consuming ― about two hours in their case ― but worth it.
"We're very comfortable with our decision," Hughes said. "At the end of our term we'll be shopping again, but as of now, I'm pleased."
