In my last few posts, I have been writing about the
electrical utilities and their winter rates. In this post, I take a look at the
competitive energy suppliers in New Hampshire.
Electricity consumers in NH have a choice. They can go out
and pick their electricity supplier or they can simply leave it to their
utility to source and supply their electricity under the so-called default
electrical service rate (see Gonna
Take You Higher post).The move to competitive electricity supply has gone
through two waves. In 2006, five years after the onset of electricity
deregulation in NH, there was a massive migration of commercial and industrial
customers to competitive suppliers. In 2011, there was a second wave of
migration, this time by retail customers. Right now, about 50% of the
electricity supply in NH is from competitive suppliers. The table below shows
data for overall competitive supply for the NH electrical utilities and some
information for large commercial and residential customers. It is clear that
competitive suppliers provide most of the electricity for large commercial
customers. In the case of PSNH, this is a stunning 96%, which, as I have noted before,
leaves the residential customers responsible for picking up most of the costs
for PSNH’s generating assets.
There are three types of electricity providers in NH. There
is the utility itself which the default supplier, and then there are competitive
suppliers and aggregators. At last count, there were 25 competitive suppliers
and 90(!) aggregators.
The competitive suppliers approved to offer electricity supply
are listed
on the NH Public Utilities Commission (PUC) website. Not all of these
companies supply to residential customers: some specialize just in the larger
commercial and industrial customers. Of
the 25 competitive suppliers, 16 supply to the residential market but not all
suppliers are active in all utility service areas.
Suppliers actually have to source the electricity and work
with the utility to get it delivered to your home. Aggregators adopt a
different approach. They will do the shopping for you and will go out to
competitive suppliers and find a good rate for you. Once they do this, and you
agree to the terms, they will then switch you to the competitive supplier. Aggregators
tend to specialize in specific markets, e.g. small commercial customers or geographic areas.
Some of you may recall
the drama caused last year by one of the competitive suppliers, Power New
England (PNE) and its aggregator, Resident Power, when PNE was suspended by
ISO-NE for cash-flow problems created by high electricity rates in the winter
of 2013. With the suspension of PNE, about 7000 customers had to be transferred
back to the default service of PSNH over a weekend.
There are some key points that everyone should know about
competitive suppliers:
- Competitive suppliers are not regulated. Their prices and terms are not subjected to the same scrutiny as those provided by the utilities through their default service rates.
- Do your homework. Look at the rates and request the terms and conditions.
- Competitive suppliers offer fixed and variable prices.
- There can be costs for switching.
- Competitive suppliers can shunt you back to the service utility at their discretion.
- The utility is always there as a backstop, in case your competitive supplier cannot supply electricity or goes under.
The NH PUC provides helpful information on competitive
suppliers, including a useful
list of FAQs and, particularly, a valuable
list of questions to ask suppliers.
One of the challenges we face as consumers is that sometimes
there is simply too much choice. It is well known that, in the face of too much
choice, we often pick the easiest option – which is usually the default option.
How many of us really have the time to call those 16 competitive suppliers and
the compare their rates and terms?
This is where information-aggregation tools, such as Kayak for airline prices, are so useful.
In one simple search, you can look at most airline rates on one page. One would
hope that a similar tool would be available for competitive electrical supply,
but, unfortunately, similar tools for NH electricity shoppers are not as helpful.
ShopEnergyPlans.com
is one such site, but only a limited number of suppliers post their rates on
the website. Recent examination of the website showed only three vendors in the
PSNH service area. I chatted to Andre Ramirez, one of the co-founders of ShopEnergyPlans.com,
about this. Although he has contacted most of the NH suppliers, there is a
reluctance for many suppliers to openly exhibit their rates on an aggregator
website. On reflection, I think this is understandable, particularly for a
price-sensitive commodity, such as electricity, where customer loyalty is very price-dependent.
It is the lowest price that will command the most interest, so many vendors
choose not to post when their prices are higher.
In my chat with Andre, I did learn of a new feature offered
by ShopEnergyPlans called PlanTracker. This is a
notification tool that sends out emails with recommendations for actions to
take regarding your electricity supplier. Having entered Manchester as the zip
code for my energy service provider, this morning I received an email
recommending that I stay with PSNH for the time being. A list of their recent
recommendations for New Hampshire and Massachusetts are tabulated below. I
think PlanTracker is
a useful service and is a great way to keep on top of changes.
Although I understand why vendors may not want to post their
information on an information aggregation website, such as ShopEnergyPlans, I
still wanted to know what rates these other vendors were offering, so I spent a
morning visiting the websites of all competitive suppliers for residential
electricity in the NH service areas and collected the information in the rather
large table below. In the process, I was subjected to an overdose of photographs
of outrageously illuminated homes or of happy families in warm (and uncluttered)
homes, playing on the carpets or looking at their laptops or smart phones, as
well as more short videos featuring cute cartoon characters than one person
should watch.
The table shows all competitive suppliers servicing the four
NH utilities. Orange indicates that the supplier has not registered to supply
electricity in that particular service area. Yellow highlights indicate areas where
the supplier has registered but is not yet offering service (as indicated by
their websites). The non-highlighted
areas, of course, indicate that rates were available on the various websites
and I present the lowest rates for particular services. Many of these vendors
offer “green,” or renewable energy, options or a blend of renewable and fossil
fuel options. I did not consider these, but simply looked for the lowest rates.
Here is what I learned from this exercise of cutting through the overgrowth of
website based electricity supply marketing in NH.
- Many vendors offer fixed-period and variable options – variable electricity prices are not posted. It is probably a challenge to keep variable rates updated regularly and this is perhaps not a popular option.
- For the smaller utilities (NHEC, Liberty, and Unitil), competitive vendors do not seem to have made headway in their service areas and limited choices are available.
- PSNH has the most competitive suppliers offering prices.
- There can be a wide range of prices offered by competitors in a service area.
- Many of the competitive suppliers have cancellation fees associated with their fixed-term contracts, so if you want to jump early, you will end up with some additional costs.
- Not all suppliers offer contracts across all service periods. Some just offer a vanilla option of a single rate for 12 months.
In the deregulation process to date, the companies that have
done well are the large competitive suppliers, such as Constellation and
TransCanada, that have focused on the large industrial and commercial customers
and have won a great deal of this business. The table below, based on Energy
Information Agency 2012 data, show that these competitive suppliers are now the
second- and fourth-largest electricity suppliers in NH.
These competitors have been very successful at drawing large
users of electricity away from the utilities and there is now a slower picking
away at residential customers by smaller competitors focused on this market. It
always astounds me that more than 50% of PSNH electricity sales are going to
competitive suppliers (see the first table in this post), leaving a smaller and
smaller base of residential customers picking up the tab for those PSNH plants.
Rough calculations show that, if the costs in PSNH’s recent filing are accurate
and we assume that 60% of their costs are fixed, and if PSNH supplied
electricity to all their customers, then their costs per kWh of electricity could
be as much as 30% lower than their present default rate.
What do we take from this?
This half-hearted and incomplete process of electricity deregulation in
NH has hurt PSNH residential rate payers. We understand that it is complicated
but the process needs to be completed. It is time to move forward and get the
job done. Either pull the plug on deregulation or get it done.
In the words of that great rock and roll sage, Tom Petty*
It’s time to move on,
it’s time to get going.
And what lies ahead I
have no way of knowing
but under my feet, the
grass is growing.
It’s time to move on,
it’s time to get going.
Until next
time, remember to turn off the lights when you leave the room.
Mike Mooiman
Franklin Pierce University
mooimanm@franklinpierce.edu
(*It’s Time to Move On – A tune from one of my favorite Tom
Petty’s albums, Wildflowers. Here is
Petty performing the tune live in 1994. It’s Time To Move On)
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