Electricity supplier choices growing

The advent of energy deregulation in New Jersey nearly 12 years ago allowed electricity consumers to shop for the best rates and pick their own supplier. But the choices for alternate suppliers remained limited and only a small fraction of residential customers made the switch. Eventually, some suppliers left the state.

But newer companies have been expanding their operations in New Jersey in recent weeks, attempting to gain a foothold in the relatively untapped residential supply market.

“I guess it’s an opportunity that they see because of the economy,” said Karen Alexander, president of the New Jersey Utilities Association, which represents investor-owned utilities such as Atlantic City Electric and South Jersey Gas.

Some of the companies are promoting savings of between 5 percent to 20 percent over a year’s worth of electricity bills. Gateway Energy Services, based in Montebello, N.Y., has been mailing letters to New Jersey residents this month saying that its current electricity rates “are at least 15 percent below utility pricing.”

Karen Harris, corporate communications editor for Gateway, said the company’s push into New Jersey is favorable because consumers seem to be more open to finding other ways to save money.

Before April, the company was only certified to supply natural gas in the state. After gaining approval to supply electricity from the New Jersey Board of Public Utilities, Gateway added 15,000 residential electric accounts, said Steve Varney, the company’s director of marketing.

So what has been its strategy in converting ratepayers?

“We like to use the model of: Remember when you couldn’t shop around for a phone carrier? But now you can,” Harris said. “Once we use that as a basic model of deregulation, they think, ‘Now I get it.’ Education is a top priority for us.”

Gateway operates in eight states and Washington, D.C. Its largest presence is in New York, where it has the equivalent of 350,000 residential customers, Varney said.

The number of New Jersey residents who use a third-party supplier has grown over the past two years. As of May, 6,594 residential customers in the territory of the four major electric utilities, Atlantic City Electric among them, belonged to an alternate supplier. That’s only 0.2 percent of the 3.35 million ratepayers within those utilities’ coverage area.

But it’s a huge leap from early 2009, when there were just 12 residential customers who belonged to another supplier, according to the BPU.

People who choose another supplier will still get their power delivered to their homes by their local utility, which will continue to be responsible for maintaining the power lines or restoring electricity when there are blackouts. The main difference is how a ratepayer’s bill might look: It would still show his or her local utility’s charge to deliver the electricity as well as the alternate supplier’s charge for supplying the electricity.

While Gateway does not charge a fee to join, it does require its customers to sign contracts, either a nine-, 12- or 24-month fixed-rate plan or a variable-rate plan.

A 12-month fixed-rate plan currently offers a rate of 11.38 cents per kilowatt-hour, which is below the 12.46 cents per kilowatt-hour of Atlantic City Electric’s average annual price. For consumers who use 10,000 kilowatt-hours over a year, Gateway says they could save $108.

Gateway cannot guarantee savings with a fixed-rate contract since Atlantic City Electric’s rate can change because it is based on fluctuating market prices.

“There are other times we unfortunately will be the same or above in the rate,” Harris said. “But we offer more than the utility can because you can lock in your price and it is not going to change.”

Breaking a contract with Gateway would cost $12.50 per month for every month or partial month that is outstanding.

Another licensed residential energy supplier in New Jersey, Viridian Energy, says it offers no contracts for customers. The Connecticut-based company allows people to sign up or cancel at any time. It began service in New Jersey in May, and uses a rate that may vary from month to month. Its current rate is 11 cents per kilowatt-hour.

Viridian is trying to distinguish itself as a “green” energy provider by offering power – 20 percent or more – that it says comes from renewable energy sources. The company also signs up customers through a network of independent associates who belong to Viridian’s direct selling program. The company does not actually charge consumers to sign up for its service.

“We’re not asking for a Social Security number. There’s no credit check,” said Alison Bradford, an independent associate from Estell Manor.

There are at least seven companies that are licensed as residential electricity suppliers in Atlantic City Electric’s service territory. Companies wanting to operate in New Jersey must provide audited financial information, proof that they have experience in the industry and membership with PJM, the operator of the regional power grid. Licenses must be renewed annually, BPU spokesman Doyal Siddell said in an e-mail.

In addition, the BPU verifies any claims about how much renewable energy a company might supply and also reviews the number of customer complaints with each company before a supplier’s license is renewed, Siddell said.

Greg Leap, a Linwood insurance broker, joined Viridian last month after doing some research on the company. He’s still waiting to see how much he can save with his July bill, but is so confident in the company that he became an independent associate as well.

“Everyone would like to go green, but very few people will pay more to do it,” he said. “But this way, it’s the best of both worlds.”

Contact Erik Ortiz:

609-272-7253

EOrtiz@pressofac.com

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