How to Get a Good Deal from an Energy Marketer
I am often asked how to get a “good deal” in choosing an energy supplier?
In the past, my answer typically began with an explanation of how “deregulation” or “customer choice” developed (which gets me glassy-eyed looks), which was followed by general advice such as: determine the quality of supplier; review the terms and conditions and then the pricing.
However, as we are having renewals with our customers reoccurring for the 4th, 5th and 6th time, I think what these customers have told me is more relevant….
In addition, during our 12+ years we seen many, many processes from consultants, aggregators or in request for proposals, I have consolidated these experiences into what I believe is a list of best practices;
1. Assemble a copy of all your bills (either electric or gas) including the following (this will help you eliminate or question what a marketer sends you in step 2).
a. Identify the energy cost on the bill(s).
b. Identify the delivery cost on the bill(s).
c. Add up the total energy used (either kwh for electric or Therms for natural gas) for 1-12 months, pairing each month with the energy cost (the delivery cost will not change).
2. Contact marketers and ask them for a proposal for service.
a. A list is available at: http://realgyenergyservices.com/customer-services/web-links/ under each utility.
b. Eliminate the ones who do not reply.
c. For ones who reply, ask for a comparison for at least the last 12 months of how their proposal price compared to the utility cost. Again, eliminate those who do not respond.
d. Look at how the marketer’s pricing and the utility pricing are presented.
IN MANY CASES marketers may be above a utility in some months; they should be able to explain why.
AVOID those that are above the utility for 12 months in a row.
AVOID those marketers whose comparison does not accurately show the utility cost.
3. With the marketers who responded and sent you their pricing comparison, ask for their terms and conditions (contract or Agreement). Read their agreements paying special attention to the following;
a. Pricing; is it defined, how long does it last, and what happens when it ends?
b. Quantity; if you’re buying a fixed price make sure it says how much gas you’re buying at the fixed price and what happens if you use more or less than that amount. If you’re buying a variable rate, it should state it’s for all your usage or “open” quality.
c. Renewal; when do you have to give notice to terminate, what happens if you don’t?
d. Additional Services: is storage included, what about changing plans (from variable to fixed), taxes, service fee, online access, answered customer service (vs. automated attendants), etc. Some additional service is worth the price, some are not.
While not an official step, there are good reasons to eliminate a marketer from consideration (in other words, absolutely avoid), such reasons include;
a. No trade references or BBB accreditation.
b. An initial rate (fixed or variable) that lasts only 1-6 months and renews which is followed by a different (perhaps) vaguely defined price. These are known as “teaser” rates and will inevitably cost you more than the utility.
c. Language that doesn’t make sense is not clear in its intent or clearly favors the marketer.
d. A renewal date scheduled during the winter or summer. Make sure you can terminate your agreement for natural gas or electricity in April or May. This will give you the best period to switch or renew during a “low” energy usage period when pricing is more stable and you will not be under pressure to continue the agreement.
Natural gas prices have changed 25% in 4 weeks!
Does the words “Polar Vortex” strike fear into you?
If so, this CNBC article, Wild ride for natural gas signals volatile winter ahead, describes record production of natural gas and the forecast of colder weather similar to last winter.
So, the winter forecast is cold and there is abundant natural gas…..the question is at what price.
To avoid the uncertainty of winter gas prices Realgy offers:
Storage service’ “Winter gas at Summer prices” and PriceWatchTM (fixed price)
Please contact our Customer Service department for additional information at 877-300-6747 x1000
Read the whole CNBC article “Wild ride for natural gas signals volatile winter ahead”
US predicts lower heating bills this winter
US as a whole may have lower heating bills, however, in the article details the Midwest; Illinois, Indiana and Michigan are forecasted to have a colder than average winter.
Frosty is coming to Town!
Find the full abc news article, “US Predicts Lower Heating Bills This Winter”
Duke Energy proposes plan to modernize electric grid
Duke Energy’s proposal for maintaining/updating their electric grid in their franchise service area of Indiana is a great example of a regulated utility’s typically large improvement process.
First step; maintain the current system without improvement for as long as practical. This is usually cost effective in keeping rates low but comes with the cost of more frequent outages and high system maintenance costs.
Second step; offer to upgrade an outdated (in this case a century old) technology. After nearly 100 years without significant changes, you would think there would be benefits in replacing old technology. The highlighted benefits would be expected; however, note the absence of any measurable benefits.
Third step; get paid. Regardless of what benefits actually occur, Duke will be guaranteed 80% recovery of their costs (not estimates, but what they actually spend). The remaining 20% will be included in a new filing that is subject to regulatory review. The regulators could disallow recovery of this 20% if they found Duke did not spend the money prudently or that the intended benefits did not materialize.
Bottom-line, this will most likely be approved. The rates will increase and service should be improved. Correlating cost vs. benefits is always a challenge.
Indiana is an outlier in the area, as they do not have customer choice for their electric service as neighboring states do. One would hope that with consideration of a modern electric grid, a modern energy choice program would precede it. And, with a modem energy choice program, there is no rate increase.
Realgy offers electric choice in Illinois where the average savings is over 8%.
Read the full Intelligent Utility article “Duke Energy Indiana proposes plan to modernize its statewide electric grid.”
Exelon, politics and Illinois’ low-carbon future
This article offers excellent insight into how policy (politics) influences energy and energy costs.
Government is the only entity that can impose priorities on energy. That is, without environmental laws, energy production would be governed by cost and perhaps by convenience.
So when the Government (state or federal) imposes or doesn’t impose a tax or subsidizes an energy utility, it’s important.
Illinois has a history of supporting coal with tax advantages which historically has provided jobs and low energy costs; however, both have declined and could decline further due to carbon emissions and nuclear power.
Illinois has halted its support of renewable energy (created from wind, solar or water) with tax advantages. When they have supported renewables, it has favored larger utility scale renewables over smaller installations.
This article shows how two large corporations are presenting their case for economic assistance from the State of Illinois. Which one do you think deserves assistance?
In the interest of full disclosure, let me say that Realgy has built and operates four solar photovoltaic power plants in Illinois. Realgy received State and Federal tax subsidiaries and would not have done so without them.
Read the full Renewablesbiz article, “Exelon, politics and Illinois’ low-carbon future”
Citizens Energy Group being investigated for Energy Bill practices
Citizens Energy Group in seeking to simplify service for their customers seems to have aggravated an already problematic issue—billing. After aggregating the gas, water, and wastewater in their monthly bill, the number of complaints and the complications in resolving those complaints has sky-rocketed.
How would you react if 20% of your customers hung up because of long wait times when they called in to resolve a billing issue?
The Indiana Utility Regulatory Commission (IURC) has opened an investigation into Citizens Energy billing practices. If you have experienced billing issues, please contact the IURC (information provided below) to have it addressed.
Realgy Energy is a registered energy marketer in the Citizens Energy Select program. Through this program, Realgy offers commercial and industrial customers direct wholesale prices without any utility cost added; the result has been savings. To find out how much you can save through Citizens Energy Select, please call or visit; Service Plans for Citizens Gas
Indiana Utility Regulatory Commission Contact Info
Reference: Docket #44462; Citizens Energy billing inquiry
Read the full Fox 59 article, “Regulators to investigate Citizens Energy’s management, billing practices”
MidAmerican Energy seeks rate increase in Illinois
Twenty-two years without a raise—think about it. That would be very hard. However, utilities do not operate at a fixed cost; they operate as a regulated monopoly (like the game) and receive a fixed rate of return. That is, utilities get to spend what is necessary to provide service and seek approval for those costs. Utilities like MidAmerican earn a regulated rate of return (in business that’s called margin) on everything they spend (subject to approval).
So, although MidAmerican-Illinois (MEC) has not increased energy costs during this time, they have spent $289 million on improvements to the electric grid and their generators. If this were all spent as required to provide service, then MEC which earns about 9% rate of return, would earn about $26 million a year in profit.
So after 22 years, an increase of 21% for residential and 13% for business might not seem like a lot, but remember MEC has no competition and earns profit on spending money to provide service.
Can you avoid the rate increase? The short answer is yes.
Illinois customers of MidAmerican Energy can now participate in the Illinois Electric Choice Program. The idea is simple; provide customers the right to buy their electricity directly from suppliers without any additional cost from the local utility. The result has been savings for Illinois consumers—an estimated $37 billion dollars due to electric competition.
Realgy Energy Service is the first energy marketer registered with MidAmerican Energy-Illinois enrolling customers in the Illinois Electric Choice Program. Additional information is available at Service Plans for MidAmerican.
Peoples Gas parent to be acquired in $9.1 billion deal
Trending: Utilities are consolidating and getting bigger.
Peoples and North Shore, already part of a utility holding company headquartered in Chicago, are being bought by a Wisconsin-based utility holding company.
NICOR is owned by a utility holding company with its headquarters in Atlanta.
The acquisition of Peoples is following a trend of consolidation of regional utilities. The leading argument for consolidation is that redundant “overhead” costs can be consolidated. What consolidation usually means is that the local utility is no longer local. Remember that Peoples, NICOR, and ComEd are not competitive companies eking out an unknown profit. They have a monopoly (much like the game!) where they get to recover their set profit margin on expenses incurred in providing their essential service. That is to say, the more they spend on providing their service, the more profit they make which is why regulators approve their costs.
So consolidation means what? Typically, regionalized services by utilities means a loss of stable local jobs accompanied by higher costs. Remember it’s not a competitive industry. They get a regulated return for delivering energy. That’s why reducing costs does not translate to lower energy costs (note; if they spend less, they make less profit). Consolidating accounting, customer service, and management typically results in longer wait times, longer outage times, and higher returns to corporate shareholders.
The good news is that you do have competition for your energy services. Realgy Energy Services offer electric and natural gas service that is consistently below the utility. We compete for your business, by saving you money. And we do enjoy competing with bigger utilities!
Read the full Chicago Sun-Times article: “Wisconsin Energy buying Peoples Gas parent Integrys for $9.1 billion”.
Electric wholesale prices to rise by 9 times overall since end of Winter 2014
We ask “what is going on with electric prices?”
PJM is essentially the wholesale market for electricity in ComEd. They will request bids from generators (electric generator owners) every year for the next three years. PJM issued a press release announcing the results of their most recent auction.
The press release shares some interesting highlights such as “increased diversity” even though they acknowledge the trend to more gas-fired generation.
However, the bigger issue is that the cost of the bids increased dramatically over the next year, rising from $27.73 in 2014 to over $136 by the end of 2015. This nearly 900% increase will be passed thru to all retail customers. We have already seen about 50% of this increase.
This projected increase does NOT appear to be directly related to the winter “vortex” of 2014. However, given the timing of PJM’s bid (just after winter) and the trend to more gas-fired generation, some link shouldn’t be dismissed. Last winter reminded energy traders, power generators, utilities, and energy marketers of the extent of their reliance on certain pipelines. The demand on these pipelines is increasing (by both gas-fired electrical generation and through population growth). Therefore, as the wholesale price increases, we will be starting at a higher price next winter. If winter or summer weather spikes, we could see even greater pricing than last winter.
Realgy offers fixed pricing to reduce the effect of seasonal weather by offering a winter or summer fixed price. This allows our customers to avoid paying a premium for a fixed price when they don’t have to. Please call your Energy Broker or see our PriceWatchTM service at http://realgyenergyservices.com/request-for-service/pricewatchtm/
Read the full PJM press release, “PJM Capacity Market Secures New And Diverse Resources To Meet Future Electricity Demand”.
Local business wins; the Office of Governmental Accountability wins appeal against Department of Labor
18 JUNE 2014 | By: Realgy, LLC
One year ago in May 2013, the Office of Governmental Accountability (OGA) issued their finding which required the Connecticut Department of Labor (DOL) to provide certain documents related to their ongoing investigation as requested by Realgy. The DOL appealed that decision and the appellate court upheld OGA’s decision. The result; DOL cannot claim an exemption to releasing the information.
Realgy, LLC, a West Hartford business for 13 years, filed a Freedom of Information Request (FOIA), which is handled under the Office of Governmental Accountability in Connecticut. Michael Vrtis, President of Realgy explained “We filed a freedom of information request to hold DOL to the same standard as they have held us and seek to have information released that will show what we believe to be an abuse of power by DOL during this investigation.”
DOL filed their appeal against releasing this information as it would harm their ability to investigate Realgy stating “…that every investigation initiated is criminal in nature.” In addition, DOL cited that Realgy’s “…request for documents merely is an effort to hinder the DOL’s pending investigation and to harass the wage agent assigned to the investigation.”
However, the appellate court upheld the OGA’s finding that found that DOL had spent 4 years on the investigation, had not communicated with Realgy in over a year, and that DOL failed to prove that there is any consideration of legal action against Realgy.
Vrtis stated, “We feel grateful to OGA for wading through DOL’s defense and appeal of this investigation.” Vrtis continued, “with this appeal resolved, the original OGA’s finding are upheld and DOL will be held to the same standard as every business in Connecticut. I look forward to receiving the information and making it public.”
Realgy was only a 3rd party to this appeal as it was DOL who appealed OGA’s ruling. In essence;
The FOIC (Freedom of Information Commission) initially ruled Realgy and the public did have that right and DOL should turn over the documents. DOL sued the FOIC ruling they didn’t. The Superior Court decided they did.
This decision is important as it means the DOL has to be held accountable as is every business in Connecticut and turn over the documents they collect in the course of their business. They cannot claim that an open investigation gives them protection against such requests. DOL has no time constraints on an investigation, therefore, and has been able to shield collected information for years.
Vrtis explained “the FOIA request has been the only means available to Realgy to have DOL be held accountable for the ongoing investigation.” All FOIA requests involve a company requesting information from a governmental agency. The Office of Government Accountability houses the FOIC; additional information is at http://www.ct.gov/foi. The FOIA process required Realgy to request specific information from DOL through the FOIC. The FOIC rules on Realgy’s request for information and the resulting decision requires DOL to release the requested information.
“For over four years the DOL has investigated Realgy for violations of labor laws which can be a criminal matter. Four years for investigating one complaint from one employee who was only with Realgy for one year. Such an open investigation can be intimidating and as such, no other governmental or politician will address it until the conclusion of the investigation,” stated Vrtis.
Vrtis continued, “The Office of Government Accountability and, in particular, the Freedom of Information Commission are valuable entities. Without having to hire an attorney, Realgy can be heard by an impartial panel that has the power to order DOL to produce the records and be held accountable for their investigation. I am impressed by the hard work of this impartial panel to balance the power of governmental agencies against the need for business to protect themselves from abuse of that power.”
Contact:
Realgy, LLC
Michael Vrtis
675 Oakwood Avenue
West Hartford, CT
860-233-2270
www.realgyenergyservices.com