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The Suburbanite
  • Apples to apples: Can I save money by switching electricity providers?

  • This week, I decided to wade into the mire to figure out whether I could save money by switching electricity providers. The process was less difficult — but more time consuming — than I had imagined.

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  • The choices seem confusing, the decision daunting. So, like many folks, I had stuck with my status quo, rather than risk making a financial mistake.
    But this week I decided to wade into the mire to figure out whether I could save money by switching electricity providers. The process was less difficult — but more time consuming — than I had imagined.
    The first step was to find out what I currently pay. For that, I went to my latest Ohio Edison bill and found the “Price to Compare,” which was clearly marked on my bill as 5.96 cents per kilowatt hour.
    With that figure in hand, I went to the website of the Public Utilities Commission of Ohio (www.puco.ohio.gov) to check their “Apples to Apples” comparison chart. A similar chart can  be found at the website for the Office of the Ohio Consumers’ Counsel (www.pickocc.org/electric/choice.shtml).
    Scanning the chart, I was surprised to see that many of the rates aimed at enticing me away from Ohio Edison were actually higher than my current rate. Why would that be?
    Further digging revealed my city is an “aggregator” or bulk buyer, and had negotiated a 6-percent-off group rate for its residents. Although a bulk rate is usually low, another company might still be able to beat it, according to Marty Berkowitz, counsel spokesman.
    “The city may have negotiated that rate six months ago, when the (wholesale) price was higher, so now the rate could be lower,” Berkowitz said.  
    Many Stark County communities have programs to buy electricity in bulk, including Canton, Massillon, Hartville, Alliance, Canal Fulton, Minerva, East Canton, Navarre, and more than half the townships.   
    According to the Apples to Apples chart, AEP Energy was offering Ohio Edison customers a fixed rate of 5.69 cents, slightly lower than my 5.96 “price to compare.” I clicked on the link which took me to an online sign-up sheet.
    Berkowitz recommends talking to a company representative before signing up.
    “Get your questions answered before you sign. Is there a switching fee? How long is the agreement? Is there an early cancellation fee? Get it in writing and keep it.” (See list of suggested questions in sidebar at right).
    If I left my bulk contract, would I have to pay an early cancellation fee? I called my city’s planning and development office and found out there might be a fee, unless I waited until the annual “opt out” period in May, when customers could get out of the contract without penalty.
    Hmmm. I didn’t want to pay a penalty, unless the amount I’d save by switching would cover it. So I did what I probably should have done earlier — pulled out a calculator.
    Page 2 of 3 - My average monthly use is 610 kWH. If I switched from my current “price to compare” of 5.96 cents per kWH to the AEP offer of 5.69 cents, I’d save about $1.65 a month, or $19.80 a year. Early termination fees range from $25 to $295.  
    Of course, that simple calculation doesn’t take into consideration that the “price to compare” rate changes monthly, and could go up. Choosing a contract with a fixed rate offers protection against rising wholesale electricity prices.
    “If you go with a fixed rate, you’re opting for stability,” Berkowitz said. “You’re saying, I don’t want to play this game every month, that you want a contract that says this is the price, and now you can forget about it.”
    Me? I’m a gambler and an optimist, so I might just take a chance with a variable rate, and hope the wholesale price will fall.
    The lesson here is that each situation is unique, depending on where you live, who your provider is and what your electric usage is. Each consumer must take responsibility for doing the necessary research to find the best deal.
    Buying electricity should be treated like buying a pair of jeans, Berkowitz said.
    “Purchasing utilities is just like shopping at a store. You want to get the most value for the money you’re spending,” he said. “We want consumers to be as informed as possible, so they can make a wise decision that could affect their whole budget.”
    STILL CONFUSED?
    BRING IN AN EXPERT
    Being able to choose which company provides your electricity isn’t new, but it’s gotten a lot of buzz recently.
    “It’s been going on for a decade, but as the market becomes more developed, we’re seeing more suppliers coming into the area, and the offers are more aggressive,” explained Jason Gilham, spokesman for the Public Utilities Commission of Ohio. “Consumers are getting stuff in the mail, and people are knocking on their doors with these offers.”
    PUCO officials realize consumers feel trepidation about switching from their utility company to a different provider, and in response have hired four new staff members to travel the state, educating and answering questions.
    Jonithon Lacross, whose area includes Stark County, said  they are not espousing either staying with the utility or switching providers.
    “This is purely informational, to say you have these options,” Lacross said. “In the past you  just paid your utility bill. You griped about it, but paid it. Now we are being pushed to take responsibility, to look at our bills, at our usage, and stay up to date on offers.”
    Lacross likened the process to comparison shopping for a cellphone.
    “And people don’t understand how easy we’ve made it,” he said. “There’s a ‘price to compare’ right on your bill — that’s the price another company has to beat.”
    Page 3 of 3 - If a local group or organization would like Lacross to visit, you can contact him at jonithon.lacross@puc.state.oh.us.
    “We can outline how to look at a contract, how to understand it,” Lacross said. “We give them the tools they need, and the questions to ask.”