Trade Association Aims to Make It Easier for Customers to Dump Their Incumbent Utilities

Tom Johnson | July 19, 2011 | Energy & Environment
Group says new guide will educate consumers in the fine points of finding cleaner, cheaper power

It is a shopping ritual practiced by millions of Americans — though many more ignore it — searching for potentially cheaper and cleaner forms of electricity and gas for their homes and businesses.

If the Retail Energy Supply Association achieves its goals, there soon will be far more comparison shoppers. The trade group representing power suppliers yesterday launched a new effort to educate consumers about their choices and increase the number of customers bolting their incumbent utility for a new supplier.

“While millions of consumers in restructured states are enjoying the benefits of customer choice and the various innovative products and services being offered by competitive electric and natural gas suppliers, millions more are completely unaware of these opportunities,” said David Fein, president of the association.

Educated Consumers

His group aims to change that dynamic by distributing a new consumer education guide that details the information they need to make informed choices about switching from their incumbent utility to a new supplier.

The effort comes as thousands of residential customers in New Jersey have switched energy suppliers, particularly on the electric side, where a steep drop in natural gas prices has allowed alternative power suppliers to undercut the state’s four electric utilities: Public Service Electric & Gas (PSE&G), Jersey Central Power & Light (JCP&L), Atlantic City Electric and Rockland Electric.

Overall, 347,179 customers have switched electric suppliers as of May 2011, according to information on the state Board of Public Utilities (BPU) website, or approximately 9 percent of the 3.8 million electricity customers in New Jersey. While that is not as much as some other states that also have broken up their gas and electric monopolies, it is far better than a couple of years ago, when 99 percent of energy customers remained with their incumbent utility. It also is three times the amount of customers who had switched as of last November.

The number is slightly less for gas customers. A total of 177,631 gas customers have changed service from their incumbent utility out of a total of 2.8 million customers, or about six percent of those eligible.

“In the last six to eight months, we’ve seen a sharp increase in the number of suppliers entering the New Jersey market,” Fein noted. Just yesterday, another supplier said it would begin offering service in the state.

Introductory Rates

With electric rates in the Garden State ranking among the highest in the country, North American Power said it will offer customers of PSE&G, JCP&L and Atlantic City Electricity an introductory rate of 8.99 cents per kilowatt hour, lower than the price locked in by the three utilities. The Connecticut company’s offer represents 100 percent electricity generated by renewable energy sources.

Jay Kopper, past president of the trade group and head of its consumer education committee, said the group recognizes it is important consumers have a positive shopping experience when searching for a new energy supplier. It’s also essential to inform them about “bad marketing” practices, which tend to discourage people looking to switch.

In its new four-page guide, the association provides general information on competitive suppliers, types of questions to ask before entering into a contract, pricing and product data. The guide also outlines elements of legitimate sales interactions.

While more than 11 million customers nationwide have signed up for service from someone other than their current utility, Fein noted that is just a small number compared with customers who have not switched. “We’re trying to erase years and years of history,” he said.

In New Jersey, the association is also lobbying state regulators to loosen up rules governing how customers are switched from their incumbent utility. Among other things, the suppliers want an expedited process for ending service to customers who stop paying their bills.