To help you navigate Maryland’s deregulated — and frankly, confusing — energy supplier marketplace, we called on the experts to offer their practical tips to help you make energy deregulation work for your household. Grab your BGE bill, paper and pencil, and a calculator would’t hurt, too.
In November, we reported that Maryland’s energy deregulation experiment isn’t working for most households. Though third-party suppliers often advertise lower-than-BGE electricity-rates, the reality is that hundreds of thousands of households that switched suppliers between 2013 to 2016 paid nearly $200 million more than if they had stayed put with their utility’s offer.
A Dizzying Display Of Offers
Maryland joined the national energy deregulation wave and jumped in head-first, enacting the Electricity Customer Choice and Competition Act of 1999. Maryland lawmakers rolled the dice, hoping increased electricity competition would drive down consumer prices. Today, 56 electricity suppliers are approved to sell consumers electricity and natural gas in the BGE territory.
You might think there’s a bit of a “duh” factor to the tips below, but it’s alarming how many hundreds of thousands of households paid a significant premium (almost $225 last year) to suppliers for the same energy product offered by their utility.
“I placed too much trust in the supplier, and too little time into the switching decision,” said Michael D.*, who declined to share his last name for privacy reasons. “Unfortunately, over two years I overpaid XOOM Energy $4,000 for nothing.”
Michael, who lives in Baltimore, made a classic electricity supplier mistake by assuming the advertised electricity and natural gas rates printed on a piece of direct mail were long-term. The “gotcha” was buried in the flyer’s fine print: The advertised low rates that seemed to beat out BGE’s electricity rates were only for three months.
On day 91, XOOM switched Michael’s account to variable rates that were 28 percent higher than those of BGE. XOOM’s natural gas rates were a whopping 42 percent above BGE’s
“I think the supplier’s marketing was deceptive,” he said. “XOOM advertised low rates, but what they were really selling was overpriced electricity and gas.”
What to Know BEFORE You Switch:
1. “You can’t set it, then forget it.”
This sage advice comes courtesy of Phil Croskey, CEO of the Baltimore-based consumer energy advisor Point.Click.Switch.
Switching to an energy supplier means you have signed a formal business contract with terms and conditions, Croskey explained. Common terms include hefty fees for leaving contracts early. All fixed rate contracts require customers to re-enroll at the end of the contract term, which range from six to 36 months in length.
2. Switching Moves Accounts From Regulated to Unregulated Pricing.
Maryland’s Public Service Commission (PSC) regulates BGE residential electricity prices. BGE’s electricity is officially called “Standard Offer Service.”
Most consumers don’t realize that the PSC does not regulate third-party supplier pricing. Suppliers can charge whatever kilowatt-per-hour rate the market will bear. Based on actuals, suppliers often charge more that utility rates.
3. Want to Save? Know Your BGE Default Rate.
The easiest place to find the rate to compare a supplier’s offer is on the back of your BGE bill in the green box labeled “BGE Supply Price Comparison Information.” (Example below.)
BGE’s kilowatt rate is 8.2 cents through May 2018. Beginning June 1, BGE’s kilowatt hour (kWh) price drops to 7.7 cents through September 2018.
4. Watch Out for Sky-High Variable Rates.
Another little-known-fact is that the 50-plus third-party energy suppliers that market in Maryland utilize a tricky pricing system known as month-to-month variable rates. (Constellation Energy and WGL Energy are exceptions.)
Variable rates are based on many factors, including weather fluctuations and energy market forces. Variable rates can change daily and can fluctuate widely.
Good luck figuring out variable rates if you’re shopping for suppliers. Even current customers have to call their supplier each month to find out the next billing cycle’s rate. Because customer bills are private and energy choice is unregulated, it’s rare (see below) to see premium variable rate pricing in action.
5. Know Your Yearly Kilowatt Hour Usage.
BGE provides a handy chart on the back of your bill that reports your home’s monthly kilowatt hours (kWh) history for one year. The average BGE residence uses about 1,000 kilowatt hours each month.
If your home’s electricity use is low, it will be difficult to bank big savings. For heavy energy users, pennies matter, and shopping can lead to savings.
6. Goodies, Gift Cards and Airline Miles.
If the reward seems too good to be true, that may likely be the case. Be mindful that the sweet reward program is often tied to a supplier’s premium pricing plan, or to variable rates.
A quick calculation based on your actual yearly usage and the price premium-per-kilowatt will give you an idea if the extra kWh price is worth it.
7. Gotcha: Short Term Teaser Rates.
If the telephone offer, direct mail brochure or the salesperson at your door are offering you a low rate for only one, two or three months, you are being sold variable rates. Here’s how it works: Once the “low promo rate” expires, your electricity account will transition seamlessly to monthly variable rates. You will not be informed that your account was switched, because that fact is probably buried in the terms and conditions.
Switching: Is It Possible to Save?
Now that you’re seven steps closer to becoming a savvy energy switcher, here’s how to switch:
- Visit the free electricity supplier shopping tool Point.Click.Switch and view the vetted list of the best electricity pricing plans available in your territory. You can also connect online or by phone to a knowledgeable and supplier-independent energy advisor who can answer your questions.
- Per Kerrie Carden, vice president at Point.Click.Switch: “After you choose a supplier, set an electronic alert 45 days before your contract ends to remind yourself to look out for the supplier renewal letter that will be sent to you 45 days before your contract expires.”
- Carden adds: “Attach the contract terms and conditions file to your electronic alert so that you have it accessible to review in the future.”
For do-it-yourself-ers: Check out the Maryland Office of People’s Council’s supplier pricing charts. Updated monthly, this accurate and complete chart lists over 120 supplier offers. Look for plans that offer fixed rates for 12, 18, 24 or 36-month terms that beat your supplier’s standard rate. Choose a plan with no monthly fees. Consider an emission-free renewable energy product, which is often priced on par with conventional (coal-fired) electricity.
DO NOT switch your natural gas. You will rarely save, and most likely will be fleeced. To see just how high supplier natural gas rates are, look here.
What To Do AFTER You Switch:
- Check your BGE bill each month and verify in the Electric Supplier Charges box that the supplier plan you chose is what’s actually billed.
2. To avoid hefty termination fees, don’t switch to another supplier during your contract period.
3. Save even more cash — and the planet — by reducing your electricity usage. We’ve listed Maryland’s Seven Amazing Energy Efficiency Programs here.
4. Remember the ever-important contract renewal process.
“We’ve found that the most fuzzy part of electric choice is at the end of the contract during renewal process,” said Carden.
Consider enrolling in Point.Click.Switch’s Contract Watcher, a free automated alert service available to any Maryland utility customer. Point.Click.Switch will send Contract Watcher enrollees automated email reminders about renewal dates, renewal letters and future pricing plan options to consider.
“When your contract expires, consumers have the chance to re-evaluate their supplier electricity pricing plan. Most suppliers will mail customers a renewal offer letter 45 days before the end of the contract term,” said Carden.
Forgetting to take action at the end of your contract can get you in trouble. There’s a high probability that your electricity pricing plan will be quietly converted to variable rates.
* It’s shocking (and a bit embarrassing) when people learn that they have unintentionally overpaid a supplier. And Michael D. isn’t the highest overpay that I have uncovered since August 2016. That award goes to Stephen S. who overpaid Palmco $4,200 over two years. Michael wanted to share his story, and I felt it was okay for him to remain anonymous.
Updated 1/24/18: I received via email additional input from the Maryland Office of People’s Council.
- Never show your utility bill to a supplier sales person, it has your account number (and in BGE case the Electric Choice ID number), this leaves you open to “slamming“.
- Due to SOS (standard offer service rate) electric purchase procedures (BGE, Delmarva, or PEPCO), the best time to choose a supplier is mid-May. May is the only time you can see the future SOS and judge it against the supplier 12 month offer.
- Demand the full Terms and Conditions before you agree to anything as you can sign your consumer rights away. There can be some items in the terms and conditions that you may not be comfortable with.
- Complaints about sales tactics, or failure to follow contract terms, can be made to the Public Service Commission. Since pricing is deregulated, customers can’t complain about price to the PSC.
- All distribution companies and suppliers must meet the Renewable Portfolio Standard (today that is 17% of total electric purchase), so do not believe a sales pitch that states the supplier is “greener” unless they provide proof.
- Supplier charges are added to your monthly utility bill, if you refuse to pay these charges you can face termination from the distribution company.
Thanks Laurel, but I’m a little afraid to look at this point after seeing those horror stories.
You are so welcome, and yes, you may want to sit down when you do a quick scan. An acquaintance stopped by and had me review their bill. This person indeed on variable rates for at least 3 years (bge.com has your account’s last 3 years’ invoices). This person decided not to calculate the overpay amount. I said,” yep, put it in the balloon, and buy a bottle of wine with your newfound savings every month!” LOL. Feel free to email me if you have further questions, at this point I can read a BGE in about .5 seconds.
I like how you suggested that it would be wise to make sure that we are getting the right electricity supplier first before switching as it can potentially cost us to switch again due to the contract which will range to last from six to thirty-six months in length. That is great to have learned as we were just about to find an electricity supplier for our new home ourselves. Hopefully, we’ll be able to get the best one we could before we sign the contract. Thanks!