Cost Savings for Electricity Customers… With a Catch


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Connecticut residents can save about $100 a month on their electric bills by switching electric suppliers as prices start to drop at the tail end of a warm winter, but state officials warn that third-party customers need to be careful that these short-term contracts may automatically renew at higher rates.

One day after Eversource and United Illuminating announced customer bills would increase more than 40 percent to offset high supply costs, on Nov. 18, 2022 the cheapest offer on Connecticut’s Energize CT third-party rate board was a three-year contract at 16.59 cents per kilowatt hour. Locking in at that price would have saved an average Eversource customer using 700 kWh of electricity a month about $106 in January and February

On Monday, there were 16 offers at still lower prices, including one from Town Square Energy at 10.67 cents/kWh. But that contract has a much shorter term than what companies were offering at the end of last year – eight months instead of three years. So, customers who switch now will see their contracts expire in November or December – right before Eversource and United Illuminating’s rates will likely spike again next January.

In the past, PURA and the Office of Consumer Counsel have found that customers of third-party electric suppliers usually end up paying more than they would if they stuck with the standard supply rates charged by Eversource and United Illuminating. Since 2015, customers of third-party suppliers have paid $285.7 million more than they would under the standard supply rate, according to OCC.

But with those supply rates at historic highs, that situation has flipped – with customers of third party suppliers saving nearly $12.7 million last year, and more than $13 million in the first two months of 2023. 

The bottom line is that electric customers have a real opportunity now to save money by switching suppliers, but in the long run the choice could end up costing them more if they fail to keep shopping around in the third-party market.

Short-term contracts offer big savings, but…

Connecticut’s Office of Consumer Counsel said suppliers could be offering shorter-term contracts now to build up their customer base before the standard supply rates charged by Eversource and United Illuminating drop in July. 

Offering shorter terms for low-cost contracts also means those contracts will end before the supply rate goes back up next January. There are pros and cons to short- and long-term contracts, so customers need to weigh their own needs, according to OCC.

Customers who sign a long-term contract because it’s cheaper than the current rate from Eversource could end up paying more than they need to when the standard rate drops for the second half of the year, so they should monitor the rate board regularly for lower prices, OCC said. 

Suppliers can’t charge cancellation fees in Connecticut, so switchers can still change to a cheaper supplier without penalty, regardless of the length of their current contract. 

But customers on shorter-term contracts need to pay close attention to the terms of service to avoid having their contract automatically renewed at a higher rate, they said. The terms of the eight-month contract offered by Town Square automatically renew at an undisclosed rate after eight months. 

Town Square CEO Michael Stein told CT Examiner that customers near the end of their term will receive notices with different offers from the company, so they can choose what rate and length of contract to continue with. 

Stein said the company can’t predict now what those rates will be. He noted the company has more offers with different terms on Connecticut’s rate board now – ranging from 8 to 33 months in length, and from 10.67 cents to 15.97 cents per kilowatt hour.

“We are simply offering the lowest possible rate we can right now,” Stein said. “We offer longer-term contracts both on our own website and on the Energize CT site as well, to offer price certainty for those who prefer that.”

Region faces same risk next winter

New England is heavily reliant on natural gas to fire power plants and home heating systems, but has limited access to the fuel through pipelines. It’s a situation that leads to higher supply prices almost every winter as the region turns to importing liquefied natural gas – and the increase was even more dramatic this year as the Russian invasion of Ukraine caused gas prices to spike worldwide.

Warm weather in New England and Europe have eased concerns about demand for natural gas exceeding the supply this winter, and prices have started to stabilize after a chaotic year, New England Power Generators Association President Dan Dolan said.

According to the regional grid operator ISO-New England, the average market price of electricity was 5 cents per kilowatt hour in January, a nearly 60 percent drop from December, and down from 14.9 cents last January.

“With the geopolitical situation we were facing, there was a lot of uncertainty that companies were seeing and a lot of risk that was priced into the market,” Dolan said. “Given the fact that we’ve had a more mild winter, and that Europe has been able to sustain their own domestic supplies at a fairly high level, that has created more confidence that the situation will remain stable for at least some time, which has helped to back prices off.”

Jim Shuckerow, director of energy supply at Eversource, said the supply rate will drop in July, but it’s not clear yet by how much because the company hasn’t finished procuring electricity for the second half of the year.

And while a warm winter helped this year, next winter New England will still face the same constraints on its gas supply that left it so exposed to chaotic global markets this winter. 

New pipelines are unlikely, and no new liquefied natural gas storage is being built right now that could put the region in a better place next winter, Shuckerow said. The top focus now is reducing customer demand through energy efficiency programs, and federal energy regulators are planning a forum in Maine this June to discuss ways to boost oil and gas stores in the region, he said.

“That would be helpful, but the fundamental problem is still there,” Shuckerow said. “We’re just trying to come up with these bridge mechanisms.”