Cheap power to the people: electricity gets competitive

Energy giant Dominion Retail just offered me an electricity rate of .0874 ($8.74) per kilowatt hour (kWh). That's pretty good so I sprung for it. Switching electricity suppliers wins me a savings of $6.05 a month based on my July bill and would have been more had inclement weather not prevented switching on our air conditioners. The deliverer of my power National Grid charges 10% more for supply at .09714 per kHh.

Welcome to competition to be your electricity supplier. Yes, in the age of deregulation you can decide from a handful of electricity producers and choose the cheapest or even get renewable energy. Surprisingly few people are taking advantage of this option or are even aware of it, but selecting a new electricity supplier is easy. Just Google or Bing "competitive electric rates" in your state and go from there.

You'll still get a single bill from the company that delivers the electricity to your home or business. They won't change. At the moment, delivery constitutes a third of my bill from National Grid.

Itemized as separate "delivery services" charges are "transition" for terminating wholesale agreements (huh?), "transmission" from the supplier to National Grid's system and "distribution" within National Grid's system to the customer. Lesser charges are "demand" side management whatever that means, a "customer" charge largely for meters and services that goes with them and a "renewable" charge for "communicating" the benefits of renewable energy (and you thought that money actually went to create renewable energy!).

A single item called "Basic Fixed Service" is the actual electricity. The .0874 rate is only guaranteed through Dec. 31, but Dominion spokesman Dan Donovan told me the company hopes to  offer another deal when the present one expires "knock on wood." The terms are not onerous and you can cancel at any time although read the terms of any deal you are considering.

"You have to be a little bit aware [on what's on your bill] and be able to make a second choice," he says about the customer wanting to switch at the end of the end of deal. Dominion offers this rate by buying a "block of power" at a certain rate, adds its cut and offers it to customers. Folks in the Northeast are familiar with buying heating oil this way.

Examining these deals is a great opportunity  to learn about the production and delivery of electricity and gas which is offered in much the same manner (Dominion is a huge natural gas supplier, too). This is also a major step in controlling your utility bills. You shop for gasoline, right?

Some experts warn not to lock into a supplier given the volatility of overall energy prices and that the key to lowering bills is conservation. I agree with the point about conservation, but disagree with the first part.

In my shopping around, the .0874 per kWh is the best for eastern Massachusetts residents. The next best rate I could find was .0969. Rates might fall all around me, but that's a chance I am willing to take for the next six months. I'm betting that on the economy improving which usually lifts energy prices.

Indeed in such deals in the New York City area are well over .02 per kHw higher for 12-24 months deals or to guarantee supply from renewable sources. Free gift cards and according to my brother who lives in New York, free airline miles are offered as incentives to sign up although for the moment, he is sticking with his traditional supplier, conEdison.

Over the past few years, Dominion has attracted 140,000 customers in Massachusetts, a mere fraction of the two million in its home state of Virginia. "We're trying to build slowly and steadily and add a few more every year. We're not like Enron which tried to do it quickly," says Donovan.

If you do your homework by understanding your bill and shopping around for the best deal, you can save too.

This post was originally published on Smartplanet.com