Switching from Utilities to independent suppliers.


Old 05-15-03, 07:54 AM
Thread Starter
Join Date: Nov 2001
Location: USA
Posts: 1,873
Switching from Utilities to independent suppliers.

Most people are not taking advantage of switching from their Utility electric and gas to independent suppliers for a variety of reasons. The first and foremost seems to be familarity, which produces uncertainty. This is because most people do not understand the circumstances that surround deregulation. But you will save if you switch and you will not notice any change except that you will pay less as a result of switching.

For over ten years now Utilities have not been building power plants and many of their nuclear plants are in the process of being decommissioned. Yet the demand for gas and electric has increased. Besides the fact that most, if not all their present fossil fuel power plants are aging, the Utilities were forced into competing for energy in an open market. This led to a creation of a department inside the Utilities that were devoted to obtaining energy supplies for their customers. As more Utilities were affected by the failure to build power plants the more competitive it became in the market for energy supplies, the larger these departments became. It is getting to the point where the Utilities are not making any money off the purchase and resale of energy. The vast majority if not all their profits are coming from "DELIVERY or TRANSPORTATION charges." Unfortunately for the Utilities as the market becomes more competitive and demand increases by their customers the costs for acquiring energy increases.

As an energy conservationist, I have been frequently asked, why does the utility want me to save energy? The reason was because of the aformentioned and having their customers conserve energy curbed the effects of it. It is apparent that conservation is not enough and what occurred in California a few years back illustrates on how volatile the market can get under these circumstances. Most States today have a law very similar to the "Basic Service Generation" act. This is where the Utilities bid for energy in an auction. This will not stop the volatility of the market place as demand continues to increase.

States have mandated the Utilities to incorporate renewables in their systems such as solar, wind and biomass technologies. This is known as "RENEWABLE PORTFOLIO STANDARD" (RPS). In my State the Utilities must have 4% of their energy supplies come from renewables by the year 2004. If they do not accomplish this, they will be fined until they do. The RPS increases to about 10% by the year 2008.

What switching from your utilitiy to an independent supplier does for the utility is far more than what energy conservation does. It increases their profits and reduces the probability of being fined in the future. Whereas conservation reduces the consumption of energy switching does not and the utility makes their money from Delivery or Transportation charges.

Energy Service Companies Organization (ESCO's) may offer options your utility cannot. But the real advantage the ESCO's have over the utilities are overhead costs and not beng regulated. And this is passed on to you in the form of paying less for energy.

So what switching comes down to is that the service you have received from the utility remains the same because they make their money from Delivery charges and in fact will make more money if you switch. The ESCO's have to sell you the energy at a lower price because why would you switch if the price was the same or more. Furthermore the ESCO's are in a better position than the utilities to sell energy less because of the overhead to 2 are faced with.

There are a lot of ESCO's out there. Some charge to enroll and monthly fees. While others do not. Some even guarantee savings. My best advice is shop around and start saving.
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Old 05-15-03, 12:45 PM
54regcab's Avatar
Join Date: Jul 2002
Location: Oklahoma City
Posts: 661
Lightbulb Interesting read

Our local gas company makes makes NO money on the cost of gas itself just in a $6.50 "meter fee" and several misc delivery fees, riders etc.
In the summer months it's ot unusual to pay $20.00 for $2.00 worth of gas.
Customer charges dont' go up a whole lot with increased gas usage, the cost of gas raises the bill in the winter for the most part.
This way the gas co has a relatively steady income year round.

The electric co doesn't even itemize the bill just tells you KWH's used and total price.

And of course both bills come with a good assortment of junk filler stuff

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