I live in southern Connecticut where Connecticut Light and Power serves as the local electric utility.Â CT is a de-regulated state, allowing for competitive power sales.Â Power is still delivered by CL+P, but, if you so nominate,Â they will buy your power (or an amount equal to your power consumption) from a third party.
I received a number of mailings from Energy Plus.Â They offered a low rate (about 10% lower than CL+P's), with the added benefit of frequent flyer miles as well.Â One of their offers to me was 10,000 bonus miles for signing up, then 2 miles for every dollar spent on the power portion of my electric bill.Â (The portion of your electric bill paid to the utility to deliver the power doesn't accrue points.)
While the switch itself was seamless, Energy Plus quickly proved to be a bait-and-switch proposition.Â
EP offered a price of 9 cents per KWH, compared to CL+P's 10.5 cents.Â Each month for the first three months of my service with Energy Plus, the rate per kilowatt hour (KWH) of power moved up 10-15%.Â By the third month, my power rate was over 14 cents per KWH, 30% above the price charged by CL+P!Â At about the same time, I received a new mailer from Energy Plus suggesting that I switch to them (their marketing lists hadn't been updated to reflect that I was already a customer), offering a 9 cent rate!
I planned to call Energy Plus's customer service department to discuss what was going on with my bill.Â Before I did, I armed myself with data - the daily wholesale power price in Connecticut.Â (We get this data at work through a subscription service.)Â This isn't the price end customers can buy power at, but rather the 'spot price' that producers (sellers) and buyers (utilities, power resellers, etc) can trade at on a given day.
When I spoke with Energy Plus, their first retort to my complaint about the price increases was that the cost of power was 'spiking' and there was nothing they could do.Â Their agent said, "the power market moves around a lot."Â He played right into my hand, and I shared with him my in-hand data on the CT power market and asked him to clarify what price spike he was referring to.Â "Could you hold please while I get a supervisor," was his response.Â Indeed, a person describing himself as a supervisor came on.Â He was quite nice, and seemed like he wanted to keep me as a customer.Â I re-explainedÂ what I had just discussed with the prior agent, and the supervisor went quiet for a bit.Â He asked where I got the wholesale data from, which I told him (it is a bank that deals in power).Â He put me on hold for a minute then came back and offered to re-set my account to the original rate (below CL+P's rate) and refund 'the bulk' of the increases that I was charged.
I accepted their offer, and in about two weeks, a check for the amount promised, arrived.
Unfortunately, the next month's power bill came a week or so later.Â Alas, the price charge had moved up again to above CL+P's price, and well above prices offered at that time by other re-sellers.Â The 'supervisor' that I spoke with had given me his direct dial when we spoke previously, so, upon receipt of the latest bill, I called him back again.Â I made reference to our prior conversation (he clearly remembered me) and explained the new billing situation.Â This time he was much less interested in keeping me as a customer and said that the price I was getting charged "was the current price."Â I asked him again if there was anything that he could do, and he said there wasn't.
Within 5 minutes, I switched my power supplier to Con Edison Solutions.Â They were offered a guaranteed fixed rate of 8.9 cents per KWH, fixed for the balance of the year.Â No more miles...but now I'm actually achieving some real savings on my power bill!
I did end up collecting 13,430 miles from Energy Plus for four months of service (inclusive of the 10,000 mile sign up bonus).Â For a house that uses a significant number of KWHs each month, the significant incremental cost of EP wasn't worth it.Â This really was a bait and switch - they woo'ed me with a low rate and miles - but quickly ratcheted my rate up to a price that was well above market.
I've done more research since this on the independent retail power market and it really is a marketing business, not much of a power business.Â It is akin to the way the mortgage business used to be - purely about origination volume.Â Based on the data I have and the prices they were charging, EP's gross margins run well over 50%.Â All without the burden of inventory or owning power plants.
I suspect some people switch and are happy with the miles and don't pay much attention to the ongoing rate - which could make this quite lucrative for Energy Plus.
The only scenario I would consider using Energy Plus is for the initial bonus.Â My bonus posted within two months, so you might just grin and bear it, paying Energy Plus's above market rates,Â for a short period of time to get the sign up bonus.Â Unlike signing up for a credit card, this won't have any impact on your credit score.Â Just be sure to switch off of them the day after the bonus posts.
In general, beware.
(Note that power prices vary widely between states.Â Â Connecticut's are much higher than in many other states.)