[podcast]http://www.green-talk.com/podcasts/constellation.mp3[/podcast]
Remember when the phone industry was deregulated and all the sudden there was competition in the market decreasing your phone bill? What about your residential electricity bill? Is your state deregulated and thus opened to competitive residential electricity rates from other vendors? In fact, my state, New Jersey, has been deregulated since 1999. However, there was never any residential electricity provider competition until recently.
I had the pleasure of interviewing Michael Smith, Senior Vice President of Green Initiatives at Constellation, one of the New Jersey electric provider choices, about what competitive residential electricity rates Constellation is offering. Watch or listen to the ensuing podcast or video-cast where Micheal walks me through his company’s program. Note, Constellation’s rate is only available until September 30, 2010.
So, who is courting us in New Jersey? Here’s who I know. Constellation, Virdiain, and Gateway have all jumped into the New Jersey’s deregulated residential electricity market offering to lower your electric bill between 10 to 12%. Each one has their own program and you must read the fine print since some have cancellation clauses.
Why Now?
As I mentioned above, New Jersey has been deregulated since 1999 allowing for consumers and businesses to have a choice. However, not until the last couple of months, I have not seen any competitive offers in my area. My electricity is provided by JCPL, which is owned by First Energy. I was always under the impression that JCPL made the electricity and then supplied it to me. I flicked a switch and let there be light. Silly girl.
Constellation’s video on its website shows how it really works. Even though my utility supplies the electricity, they don’t necessary produce it. They purchase electricity from a supplier. If you are loyal to your utility company, don’t worry, they still get a hefty sum for transmitting your electricity. The only line item on your bill that could change is the basic generation charge NOT Delivery Charges.
So, how can Constellation buy electricity cheaper than my utility company? According to the Company,
“A utility locks in electricity at commodity prices at wholesale suppliers and regulated auctions. While competitive suppliers can purchase power at anytime particularly when energy market conditions are favorable.”
But that still didn’t explain the “why now”since New Jersey has been deregulated for years. Smith indicated offering residential customers competitive rates was a natural evolution from offering rates to commercial businesses. Think of when a product is offered in the commercial sector, its prototype is eventually offered in the residential sector. In addition, Smith indicated that historically low natural gas prices and the recession has accelerated the creation of a competitive residential market.
Bottom line? Prices are cheaper. (Right now.)
Why Change?
For JCP&L customers, Constellation is offering a fixed rate of 10.6 cents for an 18 month fixed price and 10.4 for a 30 month price plus a target gift card in the amount set forth above. For PSEG customers, the Company is offering a 10.3 cents for an 18 month period and 10.1 cents for a 30 month period. See the promotional rates here.
Note, that this rate is only good for the period of October, 2010 through May, 2011. Thereafter, you will be charged a variable rate. I have no idea what rate Constellation will be charging in the summer months; however, you can cancel your contract without penalty only during the variable rate period.
Here is what you should know:
One bill:
You will receive one bill for your electric service.
Electric Transmission:
Your utility will still be in charge of your electric transmission. So still expect brown outs during the summer and windy time period.
Termination:
If you cancel during the fixed time period (until May, 2011) you will be charged a penalty of $150. So read the fine print before you sign anything.
Move, Disabled, Can’t Pay or Die.
Your contract will be terminated. I was really worried about what happens if you move especially with this economy. The fine print says,
“If you move, become disabled and are unable to no longer able to pay for our service or die, this Contract may be terminated without penalty by giving us 48 hours prior written notice.” (Emphasis added. Notice the written part.)
No Guarantee that your Rate will be cheaper than before:
Right there in the fine print, the Company disavows any obligation after the fixed term (remember, until May, 2011) that they will provide you with a lower rate than your utility. When I questioned Smith about this he felt it was unlikely that Constellation ‘s variable rate would ever be higher than the utility since they buy in such great quantities and are very large. He indicated that they serve many of the Fortune 500 companies.
But to protect themselves, they insert that language into the fine print. So, you, the consumer, must be diligent and watch the rates. It is no different when I call Verizon each month and ask for what their special are. Verizon seems to change its packages as much as I change my underwear.
Budget payments:
The Company does not offer this at the time. Virdian and Gateway do.
Any Green Rate offered?
A green rate is where your energy purchased has a certain mix of renewable energy. Right now, Constellation is not offering that type of rate in New Jersey, but is offering it in Maryland. Smith thought a green rate could follow depending on the response from their campaign. Virdian is offering a 20% or 100% green variable rate and is about the same or slightly higher than my current utility rate . Check out their September promotion for more savings.
I suspect if Constellation gets into the green game in New Jersey they will be providing a favorable rate as well. On that line, I asked Smith if I could switch to a green rate when it becomes available. He replied that he thought that would be possible.
Just in case, you want to save some money, but still want to offset your not so clean electricity from coal, homeowners can buy renewable energy certificates (RECs) to offset their electricity footprint from Green Mountain.
Other Players in the Market
Gateway and Virdian offer different packages as well. Gateway offers fixed and variable and Virdian offers variable as well as a green rate. Similar to Constellation, Gateway has penalties associated with early withdrawal of their fixed contract.
In addition, Gateway has a fixed rate during its entire term unlike Constellation which has a fixed/variable term. So, I urge you to take your bills and compare all the rates.
If you don’t have your bills, check with your utility for the rates. In my case, I registered with my utility company to pay my bills online so I can see my past bills and rates.
Don’t just look at the utility rate sheets. They don’t necessarily correspond to your bills. How did I know? Gateway reported a much higher rate for JCPL customers who use more than 600 kilowatts. I kept my summer bill and the rate did not correspond to Gateway’s rate. Confused, I called JCPL and asked them to explain my bill.
The representative told me that for the summer that your rate may be different than your neighbor’s based upon your usage. See here for JCPL’s rates. There are 2 rates in the summer. One rate for 600 kilowatts and below and one for above 600 kilowatts. So, you are charged the first rate on the initial 600 kilowatts used, and the balance of usage is charge the higher rate.
In addition, the winter rate is the cap of what can be charge but again, you might have different rates during the winter months. These utility rate are as confusing as the current tax laws.
Bottom line, do your homework, read the fine print, and keep your eyes open to rate changes being offered. I believe you could save about 10 to 12% on your bill.
Don’t live in New Jersey?
As I mentioned above, even if you don’t reside in New Jersey, other states are deregulated. See the picture below.
Image via the Energy Information Administration.
Check to see if your state offers similar rate reductions. And as I mentioned above, read the fine print.
Every penny counts. Have you switched from your utility and if so which one did you choose?
medicare news says
low variable introductory rates followed by immediate spikes. Sometimes a slightly higher fixed electric rate will save you a lot more in the long run compared to a lower variable electric rate.
john@New York City Dog Walkers says
Thank you for posting this article! I have been looking for ways to no longer deal with ComEd and i am going to look into Constellation type services in my area! I hate buying energy from a huge company… Constellation seems to have their values in line and I can’t wait to learn more about them.
Jeffrey says
Hi John,
Make sure when you sign up with ComEd that there’s no penalty fee, cancellation fee, and no contract.
In the next few month Viridian Energy will be live in New York. And our rate is a little better.
Anna@Green Talk says
Jeff, can you explain this to me. Is Viridian buying green e certificates or is their actual energy supplied contain green energy (meaning the mix is part green energy like wind, etc?) I have been trying to get this clarified by Virdian but can’t get anyone to talk to me except customer service. I did talk to the VP of marketing but really wanted to talk to the president.
One thing that people should know is Virdian floats meaning you won’t have the same amount each month. Anna
Haylee says
Hi Green Girl, followers should always consider the environmental impact of their electricity generation choice as well as price. This information can be found on a company’s Environmental Disclosure Label that is enclosed with the bill or on their web site. For example, Constellations website shows that 50% of the electricity they supplied to their customers in 2009 was generated from coal. (Their disclosure statement also notes that they are not investing in energy conservation measures for producing their electricity.) When comparing the price of electricity generation, remember to factor in the hidden costs from pollution. For example, the particulate pollution from coal exasperates asthma so one could factor in the expenses for medical care. Another thing to look at is the company’s commitment to investing in renewables.
Anna@Green Talk says
Haylee, I absolutely agree and am hoping they will bring their green program from Maryland to New Jersey which is committed to renewable energy. Any suggestions were you would buy your green energy? Anna
Jeffrey says
Hi Anna,
For green energy try http://www.viridian.com/plugggreen
you have a choice of 20% renewable energy (save about 10% annually) or 100% pure green energy
It’s very simple to sign up. Just to the website above, click on the Become a Customer, put your name, address, account #, email address, and your telephone number.
No Contract, No credit check, No Obligation, No cancellation fee.
Julie Gabrielli says
Interesting article. It’s great that you are doing this research and trying to be as accurate as possible to help people with this switch. As a Maryland resident, I can tell you that Constellation is just another utility company. They are only as green as the state regulators require them to be — and you can be sure they are in Annapolis every year, lobbying to keep those requirements as low as possible. They offer a green mix in Maryland because they are required to by law. They would also love to add another reactor to the Calvert Cliffs nuclear power plant. Some would argue that that’s a form of green power, but there is plenty of evidence the nuclear has just as bad (or worse) carbon footprint as coal and natural gas.
I think your advice of checking your bill is great. The fact that Viridian doesn’t require you to lock in and you can switch at any time gives people the most flexibility.
Anna@Green Talk says
Julie, I totally agree with you about nuclear. I personally don’t see that as a green alternative. Is Virdian simply buying RECs or does the bill reflect a mix of clean energy? Or is this one in the same? I have been trying to get an interview with them but sending them emails is not working. I did talk to their marketing director but would really like to talk to their CEO. Any suggestions? Anna