Misadventures in consumer energy markets

Consumer energy markets have been deregulated for a few years now. A household in New Jersey has a choice of buying their electricity and/or gas from a range of suppliers. In theory, that gives the consumer the opportunity to shop around for the best rates and save a bundle on utility bills. In practice, my first experiment with that turned out to be less than positive.

The main reason for that is that while you can make a decision to switch to another energy provider “in seconds”, the switch does not occur for at least a month and a half after you place an order, which largely negates your ability to vote with your feet when you do not like the price. Furthermore, while there are plenty of easy ways to find deals on gas and electricity, you will be hard-pressed to accurately ascertain what the regular cost of energy is going to be like once the teaser rate expires.

Mid-way through last year, I decide to shop around for an alternative electricity supplier. There are quite a few of them keen to have me as a customer. They provide handy favorable comparisons of their introductory rates with that of my public utility (JCP&L – Jersey Central Power and Light), they include various bonuses for my signing up, and many do not demand any contractual obligations on my end. The fine print always says something along the lines of “After your introductory discount rate expires, we will charge you our market rate, which is currently X cents per KWh”. That last number is still somewhat lower than the current rate charged by JCP&L. Sounds like a reasonable deal.

I pick one of the companies that promise me 15% savings every month for an introductory period. It is called Energy Plus. They tell me they can switch me to their supply only several weeks down the line. When I ask why the wait, the incomprehensible explanation boils down to “such are the regulations”. That does not register with me as a potential future problem. I place the order nonetheless.

Over the next few months, electricity rate stays as advertized, which means I am saving those 15% or so every month. But when I get my first electricity bill after the introductory period, in late December, I am in for a nasty surprise. The rate skyrocketed to the point where I am now paying over 30% above what JCP&L would charge.

I call the supplier and get the “we are sorry you are unhappy, but there is nothing we can do” treatment. “These are our current rates”, I am being told. When I attempt to point out the fine print of the introductory offer and the reasonable market rate mentioned there, I hear that “true, those were the rates then, but energy rates are variable and the current rate is what it is today”.

Ok, I say, I am not going to remain your customer then. And that’s when I get knocked out: “If that is what you want to do, JCP&L will become your supplier again two weeks after your next billing cycle“. What!? I am supposed to keep paying your ridiculous rates for another month-plus?!?! “Yes, that’s the earliest we can switch you back”.

I call the public utility, and the person on the other end is understanding and all too willing to humor a sad idiot who wanted to get better rates elsewhere and now is coming back with his tail between his legs. But, no, she cannot do anything to expedite the switch either. She cannot give me a comprehensible explanation of why it is not possible to switch my supply quickly given that delivery remains through the same exact channels managed by none other than JCP&L. “This is how it works”, she says, “You should always expect the switch to take up to 45 days”.

So I end up paying another month of exorbitant rates. Electricity bill being naturally smaller in winter, I calculate that I still come out with some savings over the course of the entire experiment, but a serious chunk of my gains has gone down the drain in the last two and a half months before Energy Plus is no longer my supplier after mid-February.

I am afraid that puts me off further experimenting. I don’t know why I should have trust in the public utility being more conscientious about their rates, but I definitely have no trust in those alternative providers now.

5 comments on “Misadventures in consumer energy markets”

  1. Dr. Phil

    Anything that involves just a switch in the accounting is going to take longer than something involving the bolting off and on of a meter.

    Dr. Phil

  2. geo

    Thank you so much for posting this. I have been contemplating the idea of switching to Energy Plus but had some doubts. Your post has saved me headaches.

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