The Connecticut Office of Consumer Counsel recently called for the end of electricity choice in Connecticut. The OCC says electricity choice doesn’t save money. Retailers say you can save. But what’s the reality?
We’ll give you both sides of the argument. We’ll tell you why Connecticut electricity rates are so high. And we’ll show how you really can save on your United Illuminating or Eversource bill when you switch suppliers.
Can I Save Money By Shopping for Electricity in Connecticut?
According to the Connecticut Office of Consumer Counsel (OCC) from 2015 through 2018, Connecticut consumers using third-party electric suppliers paid an estimated $200 million more than consumers on electric utility standard service (more on that below).
But here’s the current reality. Switching to a retail energy provider can and will save you money versus the standard service rate with both United Illuminating and Eversource.
Here’s the current United Illuminating rate — and sample offers you can switch to now.
|Company||Price per kWh||Term|
|United Illuminating||11.2263¢||Jan 1 - June 30 2019|
|Discount Power||7.70¢||6 month fixed 100% wind|
|Public Power||9.8¢||36 month fixed|
|Direct Energy||9.79¢||18 month fixed|
(Table based on electricity offers available 3/19/19)
And here’s the Eversource rate — and sample offers you can switch to now.
|Company||Price per kWh||Term|
|Eversource||10.143¢||Jan 1 - June 30 2019|
|Discount Power||7.77¢||6 month fixed rate|
|Direct Energy||9.09¢||18 month fixed rate|
|Public Power||9.44¢||36 month fixed rate|
(Table based on electricity offers available 3/19/19)
It’s clear from these charts that you can save versus the utility rate when you shop Connecticut electricity. So what’s all the noise about?
Office of Consumer Counsel — End Connecticut Choice Program
On February 4th, 2019, the Connecticut Office of Consumer Counsel announced that they were recommending the end of electric choice in Connecticut.
According to Connecticut Consumer Counsel Elin Swanson Katz:
“Our residents – especially those who are low-income, elderly, use English as a second language, and other vulnerable populations – are getting ripped off by these third party suppliers which often charge significantly higher rates than the electric utility default service.”
The Public Utilities Regulating Authority (PURA) has, over the years, conducted numerous enforcement proceedings. They have collected millions of dollars in fines related to improper marketing practices. (See below why we recommend never buying from a door to door offer!)
Examples of improper marketing include: failing to provide contracts in Spanish to Spanish-speaking customers, misstating the price of standard electric service from the utility, not explaining the purpose of marketing calls in violation of state law, misrepresenting cancellation fees and impersonating utility company employees.
The unfortunate reality is, Connecticut has very few regulations that specify what retailers can and can’t do. And some sales agents have taken advantage of that.
The Connecticut legislature is discussing regulations that would:
- Define telephone sales and establish regulations, including a requirement they be recorded
- Add requirements for electric suppliers regarding door to door marketing
- Permit PURA to order fines and restitution to customers
- Prohibit the assignment or transfer of customers without approval.
These regulatory changes are all good things for the market.
The Industry Responds — Keep Connecticut Electric Choice Program
As you can imagine, industry advocates from the Retail Energy Supply Association (RESA) are concerned about shutting down CT Electricity Choice.
They did what we did — took a look at the current market conditions, instead of a look back at the history.
In an evaluation conducted by Intelometry Inc., a retail energy systems and data provider that specializes in retail energy markets and operations, data revealed that retail electric supply companies offered dozens of rates below the United Illuminating and Eversource basic service price in just the first month of 2019.
Consumers who shopped those rates and switched could have achieved total savings of $14 million versus the Standard Service Offer.
RESA also emphasized the benefits of deregulation and shopping, including:
- Renewable energy choices
- Fixed rate plans (vs. utility rates that change twice a year)
- Charity contributions with enrollment
- Military discount rates
- Plans that include added gadgets like a Nest Thermostat or an Echo Dot.
So Who is Right? Should Connecticut Electric Choice End?
They both are right.
There have indeed been bad actors in the industry. They have targeted lower income neighborhoods, they have switched consumers without their consent, and they have misrepresented plan information.
There are also good actors in the industry. Suppliers that work hard to provide straightforward pricing and unique offers that benefit the consumer.
And the reality is, as we showed above, you really CAN save money compared to the utility electricity rate, if you shop for an electricity supplier in Connecticut.
Electricity deregulation is doing the job it is supposed to do. It should continue.
How to Avoid Getting Ripped off on Electricity in Connecticut
But here’s the reality.
Door to door sales pitches and telemarketing calls have one thing in common — a split second decision based only on the information that the sales agent has provided you.
You don’t know that person. You don’t know if they are telling you the truth. Maybe they are leaving out some details.
Plus door to door sales has a history of targeting lower income, densely populated neighborhoods. And, door to door sales offers are seldom the least expensive offers in the market. (These realities of door to door sales are possibly what led to the OCC conclusion).
The better bet is to do your research. Look at your electricity bill. Understand your usage. Understand capacity, your ICAP tag and how it impacts your bill. Understand that the standard service offer rate from your utility will change twice a year.
And, if you are on a low income, senior citizen or have access to a discount program with the local utility, stay on it. These discounts give you a much lower price than the Standard Service Offer rate, and are likely lower than you can get from a supplier
The best way to compare electricity rates is by using a comparison site like ElectricityPlans.com. We make it easy to compare Connecticut electricity rates. We only feature plans from the most reputable providers. We watch out for tiered rate plans and hidden fees for you. And we break down every plan into an easy to understand chart format, like the one below.
What Drives High Electricity Costs in Connecticut
Connecticut residents pay among the highest electricity rate per kilowatt-hour in the country, according to the EIA.
While some point to deregulation as the culprit, here are some of the underlying issues that drive high electricity prices in Connecticut, compared to the rest of the country.
- Renewable Portfolio Standards. Connecticut has mandated by 2030, 48% of electricity sold in the state needs to come from renewable resources. Renewable generation tend to be more expensive than power produced from other sources.
- Reliance on Natural Gas. 49% of electricity generated in the New England region is from natural gas-fired power plants. This supports Connecticut’s goal to generate electricity with lower carbon emissions. However, it also ties electricity generation to volatile natural gas costs.
- Power Line Congestion. Because the demand for electricity in Connecticut has grown faster than the state’s electric infrastructure in recent years, the transmission system became increasingly congested. This congestion decreases the physical efficiency of the transmission lines, which increases the cost of power.
- Capacity Charges. With limited electricity generation (power plants) in the New England Area, you also pay for “capacity.” Capacity is the capital cost of power plants and the investment needed in transmission lines to deliver electricity. Capacity fees help incent companies to build more power plants in CT and the New England area.
How Utility Rates are Set in Connecticut
Your cost of generation supply from Eversource or United Illuminating is based on the cost of fuel to generate electricity, and the cost of supply contracts that they can secure. PURA, the Connecticut Public Utility Regulatory Agency, oversees the rate setting process for the Standard Service Offer (SSO) or utility default rate, to ensure that consumers pay a fair price.
The SSO changes every 6 months, on January 1 and July 1. Utilities announce new SSO rates in CT 7 weeks before rates are effective, in mid-May and Mid-November. You can find a history of SSO rates online on the PURA site.
How to Get the Best Deal on Electricity in Connecticut
We spend a lot of time thinking about and writing about electricity (which, you can imagine, makes us fun at neighborhood pot-lucks.)
We even wrote an article called, How to Shop for an Electric Supplier in Connecticut. In it, you’ll find basic vocabulary, whether or not you have electricity choice in your area, and what to look for in a supplier. You’ll also find tips on lowering your ICAP tag.
Here’s a quick summary on how to shop:
- Understand your usage
- Know your current rate
- Manage your ICAP tag by conserving energy
- Read the details on electricity offers
- Shop electricity plans online at ElectricityPlans.com rather than buying from a door to door sales person
- If you are on a low-income discount program, don’t switch to a competitive supplier
Will Electricity Choice End in Connecticut?
It’s very unlikely that electricity choice will end in Connecticut.
What’s more likely is that there will be a lot of discussion, and likely an outcome of additional regulations on retailer behavior. We’ll monitor and provide regular updates!