Are You Overpaying For Electricity?

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BGE’s new bill format is clearer. Green circle is electricity supply and delivery charges. The blue circle is natural gas.

Research suggests that while 83 percent of us are interested in our utility bill, only 17 percent understand our  bill. The average BGE customer pays $2,100 a year for electricity and gas. It turns out many needlessly overpay for home energy for two reasons: poor electricity and natural gas supplier switching choices and inefficient leaky homes.

Do you know how much a BGE kilowatt costs these days? Have you switched your electricity and natural gas suppliers? If you have switched suppliers for electricity or gas, are you getting a good deal? If you switched, are you inadvertently paying variable energy rates? If so, that can be risky because your rates are tied to energy markets. 

Grab your BGE bill, or better yet go online, and check out the tips below to help you read your bill. You may find some cash saving opportunities. Figuring out if you’re a heavy user may inspire you to check out energy efficiency ideas.  Save money, save energy, save the planet.

Deregulation and Your Utility Bill

Maryland deregulated energy in 1999. Let’s say you live in Baltimore.  This means that while BGE still owns and services the power lines that bring electricity into your home, competing firms can buy electricity from different power suppliers, and sell it directly to consumers (and businesses). As of December 2016, 21 percent of Maryland homes had switched suppliers.

Your bill is made up of BGE delivery charges (power lines, service, billing, emergency), supplier charges (kilowatts of electricity and therms of gas multiplied by a rate), and taxes and fees based on your monthly usage.

Check out this BGE link that diagrams what’s on your bill. 

Because of deregulation, Marylanders have the option of choosing an electricity or natural gas supplier. Consumers often switch for lower prices or renewable energy, or even loyalty point programs. But usually, it’s price.

As we reported a few weeks ago, retail electric switching isn’t going so well for consumers. From 2013 to 2015, $137 million has disappeared out of Maryland homeowner’s checkbooks and been paid to retail electric suppliers.

Why? It’s very confusing to compare pricing and figure out if you’re getting a good deal.

BGE per kilowatt price: It’s a fixed $.0905 price through May 2017

Your electricty supply is based on a regulated Standard Offer Service (SOS) rate that is two fixed rates: a “winter” rate charged October to May, and a “summer” rate charged June to September.

Prices have been pretty close to $.0905 per kilowatt for several years. BGE’s natural gas prices change monthly, and have been quite low as fracking has flooded our domestic market with cheap natural gas.

The Very important green box on your BGE bill describes how your regulated electricity kilowatt rate is $.0905 through October 1, 2017.

Your electricity supply monthly charge is a basic calculation of the electricity kilowatt rate, or price, multiplied by the number of kilowatt-hours a home used that billing cycle.

What’s tricky about reading BGE’s bills is that the $.0905 SOS rate doesn’t have a dollar sign, so people often miss that this is the price. See below:

On this sample BGE bill, the monthly electricity supply was 617 kilowatts multiplied by .08983 cents. A dollar sign would help here, no?

Have you switched suppliers? Is it the rate you expected?

The area of most confusion is electricity and natural gas supplier switching. The new BGE bills are clearer and graphically show on the front of the bill how much your home was charged for both electricity and natural gas delivery and supply charges. To find your supplier rate for the month, check out the total use line in picture below.

If the rate is not the same as BGE’s SOS rate of $.0905, call your supplier and ask what plan you are on, variable or fixed rate.

For example, the account below is a 12-month, FIXED rate of $.088 cents per kilowatt with WGL Energy that expires in May 2017. The owner of this account must renew and look out for a renewal letter in the mail by May 2017. 

Taken off an actual bill, this customer paid WGL services $.088 per kilowatt multiplied by 852 KH (kilowatt) for renewable energy. Notice the supplier’s contact info is printed, too.

What are you paying your supplier? It’s buyer beware!

Electricity and natural gas suppliers contracts are just that, business contracts with terms and conditions. Consumers are clearly not reading the terms and conditions if you look at the average $140 overpay per customer in 2015.

There are many fixed rate offers below BGE SOS rates, and switching suppliers can be a positive experience, especially if you want renewable, but the onus is on Marylanders to know what they’re buying.

The Maryland Public Service Commission regulates residential electricity. Recent Title 20 regulations should better help consumers during the purchase, but pricing is not regulated on the whole.

For reference, BGE’s SOS electricity rate is $.0905 through May 2017. BGE’s natural gas rate for December 2016 was $0.40 per therm. Gas rates change every month.

Variable energy rates are often not ideal

Unlike BGE’s regulated standard SOS electricity rate, variable rates are tied to energy markets. Rates can go up and down. Variable rates are often higher, in some cases, much higher, than BGE’s standard offer service rates as evidenced by the $137 million overpay from 2013 to 2015.

This customer’s December bill was a bit of a shock when they learned they had been switched to a variable gas and electricity rate. The 0.119 rate is over BGE’s $0.0905. The natural gas rates are $.073 cents vs. BGE’s  rate of $0.40. Teaser rates got this customer; they missed the variable part in the terms and conditions.

Consumer are inadvertently finding their accounts have been switched to variable rates two ways:

Teaser rates: Suppliers market through direct mail, telemarketing or direct sales agents, an introductory “teaser rate” for a few months. Consumers don’t catch the “teaser” part of the plan: the account will automatically revert to variable pricing.

Missed the contract renewal: At the end of a contract, if a consumer misses the renewal letter, and does not actively call the supplier and opt-in, many suppliers are switching accounts to variable rates.

Both pricing activities above are legal. 

Comparing Natural Gas Rates:

Comparing BGE natural gas rates is tricky, but there are two web sites to help you compare: BGE’s published rates and the Maryland Office of People’s Counsel Electricity Choice pages that list by utility all rates for BGE and the suppliers every month.

I think I’m on variable rates. What now?

If you notice that the supplier electricity or natural gas rates paid on your BGE bill are pretty high, your account is most likely priced on a variable rate. Go online to bge.com and check out a few month’s bills to verify.

If the rates change month-to-month, you’ve got your answer. If the rate is high, but the same, you may be on a fixed rate contract, and you didn’t know that you chose a high price as compared to BGE’s standard rate.

What to do?

1. Call your supplier:

The supplier’s contact information is on your BGE bill. Either negotiate a better price (compare rates below), or cancel and your supplier portion will automatically back to BGE. Make sure you ask about cancellation fees. In Maryland’s deregulated market, suppliers are allowed to impose high cancellation fees for breaking a contract before its term is over. 

2. Shop around:

If you’re a bargain shopper, or you want to choose renewable energy for your home, here are the pricing rate comparison web sites: Office of People’s Counsel and the Public Service Commission’s searchable page.

GreenLaurel isn’t a broker, and I’m not making any any profit from suggesting readers get-to-know their BGE bills. This a detailed process and frankly, a dull topic, but unfortunately I’ve been looking at many BGE bills where the homeowners have been unaware they are overpaying. A recent bill I saw showed the homeowner overpaid $1,000 to BGE in a year! Informed consumers means informed energy choices. 

The next step is to plug up your leaky home and more widely use energy. Maryland has at least six fabulous rebates and programs to help you make your place energy efficient.  Soon, your energy report may look like this:

This Baltimore City home’s BGE Energy Report shows the home uses less than the 20 percent efficient neighbors. 

Laurel Peltier
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Laurel Peltier

Laurel writes the environmental GreenLaurel column every other Thursday in the Baltimore Fishbowl. A graduate of UVA's MBA program, she spends her time with her family and making "all things green" interesting.
Laurel Peltier
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2 COMMENTS

  1. This is a very helpful post, Laurel. Thanks to your research, I was able to switch to a lower cost AND renewable energy supplier. I did not know that renewable energy could be cheaper than BGE. I’ve saved 8-10% on my electricity bill.

  2. Angela: Isn’t it nice to support eco-choices and save cash.

    PLEASE write down that you switched around Valentine’s Day. Look out for your renewal letter next Valentine’s Day. Or, read Fishbowl’s Green Electricty Guide. I’m assuming you chose a 1-year fixed price electricity contract.

    I often hear from readers and people in my life that living sustainably is expensive. Actually, when you use as little energy as possible by reducing miles per gallon, reducing electricity and natural gas use, your cash expenses drop big time. These 3 activities are your carbon footprint levers and it’s where we all spend a lot of money. The energy report in the article is mine. We save ~$5,000 a year.

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