Saving money requires staying on top of things.
By: Paul Muschick |
The mail and calls to your home make it sound so easy to reduce your monthly electric bill by signing up with a new power supplier.
The reality is it’s not always so easy.
You can save money by shopping around. But saving requires diligence. You must scrutinize your bills and keep up with ever-changing prices. Even if you do, the state’s regulatory process moves so slowly you might not be able to take advantage of a new savings opportunity — or get out of a bad deal — immediately.
You could even end up paying more, like Jim Miller of Allentown did.
His one-year rate lock with Dominion Energy Solutions expired recently and his rate immediately jumped from 8.4 cents per kilowatt hour to 9.9 cents.
He knew he’d be switched to a variable rate after the contract expired, but he didn’t like the answer he got from Dominion when he asked why his rate rose. He said he was told he didn’t use enough electricity, so the company had to charge him more.
“We don’t make any money with you,” Miller said a Dominion representative told him.
At 9.9 cents, Dominion charged him $55.61 in June for 560 kwh. Last June, at 8.4 cents, he paid $47.57 for 561 kwh. The rate hike cost him about eight bucks.
Dominion spokesman Dan Donovan told me Miller’s rate rose because prices reflect the cost to serve each customer, which can result in different prices for different customers.
Miller, who said his neighbors and relatives are paying less with Dominion, doesn’t see what that has to do with paying more for using less.
“I don’t think people who use less electricity should be penalized for using less electricity,” he said.
Donovan told me that rates account not only for the amount of power used, but when it’s used, such as during periods of peak demand when electricity costs more. Two years ago, Dominion even dropped customers in the Lehigh Valley based on their power use patterns.
If you’re confused, you’re not alone. This is the kind of stuff you may encounter when you’re shopping for electricity in Pennsylvania. I’ve heard from others lately, too, who feel burned by the process, like Ron and Wendy Riedi of Moore Township.
They were paying Palmco Power as much as 14.2 cents per kwh. They didn’t know that until they got a sales call from a competitor asking why they were paying so much when the going rate in their area was only 8.7 cents per kwh, the default rate for Met-Ed.
They knew when they signed up with Palmco two years ago that their rate would become variable. But they’re so busy they hadn’t checked their bills to see how much they’d actually been paying.
They know now that was a mistake. But they didn’t expect rates to vary so wildly.
“Imagine how much these companies are making by people just not looking at their bill,” Ron Riedi said. “They’re expecting people to not be diligent and look at their bill.”
The Riedis and Miller signed up with new power suppliers. But even that left them frustrated, as their changes didn’t occur immediately. It can take 16 to 45 days to switch under the current regulatory process. That’s too long, and forces people who know they’re paying too much to continue paying too much.
Pennsylvania homeowners and businesses have the right to shop for power. The state deregulated the industry several years ago, meaning we’re no longer forced to buy electricity from traditional geographic utilities such as PPL, Met-Ed or PECO. We can switch to an alternate supplier and among suppliers.
Situations like what Miller and the Riedis have experienced are why I haven’t switched.
I’m still with Met-Ed. While I’m always looking to save a buck, I’ve decided this is one area where it’s not worth my time for what I’d save. And I sure don’t want to end up stuck in a situation where I’m paying more.
Other people have complained to the state Public Utility Commission and to the Office of Consumer Advocate. Those agencies told me homeowners must stay engaged in the shopping process to save money, especially as their contracts expire.
“If they don’t take an action, they may end up on a variable rate and that rate can go up very high,” acting Consumer Advocate Tanya McCloskey said.
But Miller was engaged and still felt he got burned.
So is John Boyle of Lower Macungie Township, who contacted me to complain about how long it takes to switch suppliers. He said he keeps on top of the changing rates but by the time he gets the information he needs to make a move, he can’t always do it soon enough to take advantage of it.
I’m not trying to deter you from shopping for a better deal. You can save money, and not everyone encounters problems. As of Aug. 21, about one of every three Pennsylvania power customers had switched to an alternate supplier. That’s more than 2 million homes and businesses.
A J.D. Power survey in June found Pennsylvania electric customers were the most-satisfied among the seven states studied.
The PUC is aware some people have issues and says it’s trying to help by teaching them how to shop smartly. It says it’s working to reduce the time it takes to switch power suppliers by at least 10 days.
But that proposal was issued in November 2011 and still hasn’t been implemented.
Agency spokeswoman Jennifer Kocher told me consumers should notice a difference in the next several months. She said it takes time to get issues like that through the regulatory process.
When you’re shopping for a new electric supplier, don’t just look at the price. Consider whether you will be locked into a contract, what it would cost to break that contract, and whether the rate is fixed or variable.
And keep your guard up against misleading or deceptive sales pitches from competing suppliers. I’ll have more on that in Thursday’s Watchdog column.
The Watchdog is published Thursdays and Sundays. Contact me at firstname.lastname@example.org, 610-841-2364 or The Morning Call, 101 N. Sixth St., Allentown, PA, 18101. I’m on Twitter @mcwatchdog and Facebook at Morning Call Watchdog.
Shopping for electricity
Find current rates and tips at http://www.papowerswitch.com and http://www.oca.state.pa.us