Tuesday, July 07, 2009

How to Save Money on Your Electric Bill Right Now

Over ninety percent of Marylanders can save money on their electric bills right now. You don’t need to write the Governor. You don’t need new legislation. You don’t need any help from politicians. You can do it NOW.

First, let’s understand how Maryland’s electricity market works. Under deregulation, utilities like Pepco and BGE do not generate their own electricity. They buy it from other suppliers. Sometimes those suppliers are subsidiaries of the same parent company (as is the case with BGE’s parent, Constellation Energy) and sometimes they are not. But you as a consumer have the right to choose your generating company and your utility will then distribute the power to your home or business. If you do not choose a generator, the utility will sell power to you from its suppliers under a Standard Order of Service (SOS) price. Ninety-seven percent of state residents do not exercise their right of choice and instead purchase SOS, but you don’t have to be one of them. The SOS price is not always the best price. Sometimes, you can find a better one.

The state’s Public Service Commission website allows you to find the power generators who sell in your area. In Pepco’s service territory, there are currently five suppliers you can choose: BTU Energy LLC, Clean Currents LLC, Horizon Power & Light LLC, Pepco Energy Services and Washington Gas Energy Services. BGE’s service territory has ten suppliers. All of the suppliers’ websites are listed and you can find out their offers.

How do you shop? First, find out your utility’s SOS price to compare, which is the average cost per kilowatt hour (kWh) of electricity generation and transmission. Utilities report this figure on their websites. Pepco’s SOS price to compare for residential customers is currently 12.51 cents per kWh. If you are receiving SOS – Pepco’s default supplier – this is the average price you are currently paying.

If you are a residential customer receiving BGE’s SOS, you are currently paying an annual average of 11.97 cents per kWh.

Now let’s check two of the alternative suppliers in Pepco’s service area. Let’s start with Clean Currents, a company based in Rockville which specializes in supplying wind power. Clean Currents is now offering both Pepco and BGE customers a rate of 11.2 cents per kWh for power that is 50% derived from wind energy and a rate of 11.7 cents per kWh for 100% wind power. That means Pepco customers can save 10.5% off their power bill and BGE customers can save 6.4% and simultaneously increase their use of wind power by switching to Clean Currents.

It gets better. You can save even more money with Washington Gas Energy Services (WGES). In Pepco’s service area, WGES offers electricity at a base rate of 10.8 cents per kWh. The rate goes up if you want higher percentages of wind power. That same base rate of 10.8 cents is available in the Baltimore area. That means Pepco customers can save 13.7% off their power bill and BGE customers can save 9.8% by switching to WGES.

These rates will not be in effect forever. But by looking for the best deal every year or two, you can save a bundle of money. Deregulation, which was intended to lower prices through competition, did not work when competitors were not present. But now they are in both the Washington and Baltimore areas. And now you know how to make this market work for you.

That’s the good news. The bad news is that some politicians in Annapolis are trying to take away your ability to save money. We’ll reveal how tomorrow.