New electric prices for July 2010 through January 2011 recently announced by Cape Light Compact (CLC) for Vineyard and Cape Cod customers show a reduction in rates compared to the first six months of 2010.
Competing for attention with Compact’s good news, however, is a competitive offer for a long-term fixed rate from Dominion Retail that has many Vineyarders pondering whether to make a switch.
CLC’s new basic service rate for July 2010 through January 2011 meter-read dates for residential customers is 7.99 cents per kilowatt hour (kWh), a 9 percent decrease from 8.79 cents per kWh in the previous six months. CLC buys its power from ConEdison Solutions, based in White Plains, N.Y.
CLC is a public regional energy services organization authorized by the 21 towns of Barnstable and Dukes County to choose the electric supplier for the residents and businesses of Martha’s Vineyard and Cape Cod. The compact works with the combined buying power of the region’s 200,000 electric consumers to negotiate for lower-cost electricity and also operates a regional energy efficiency program.
NSTAR, the largest Massachusetts-based, investor-owned electric and gas utility, distributes electricity to CLC customers. Monthly electric bills come from NSTAR and include the utility’s charges for energy transmission and distribution, in addition to the charges from the energy supplier.
CLC customers can opt out and choose another electricity supplier, including NSTAR. This month CLC posted a consumer advisory on its website (available at mvtimes.com) in response to numerous calls from Martha’s Vineyard and Cape customers regarding long-term electricity pricing offers from competing suppliers.
CLC encourages competitive power supply in its service territory and takes no position either for or against other pricing offers, the consumer advisory said. However, CLC recommends that customers read contract offers carefully, make sure they are comparing “apples to apples” when it comes to rates, and find out if a supplier adds “pass through” charges on to them if the market fluctuates. CLC does not.
In a recent promotional mailing, Dominion Retail offered Vineyard and Cape Cod NSTAR electric customers a rate of 9.49 cents/kWh through a May 2013 meter-read date. The offer is limited to the first 10,000 customers who enroll by July 30.
Dominion Retail is a licensed electricity supplier in Massachusetts whose parent company is in Virginia. For comparison purposes, the Dominion letter provided electricity prices for CLC and NSTAR. However, the prices cited, 11.50 cents/kWh for CLC and 11.30 cents/kWh for NSTAR, were an average of electricity prices from January 2007 through June 2010.
The letter did not include Dominion’s average price for the same time period. When asked by The Times about the omission in a phone call last week, Dominion’s media relations manager Dan Donovan said it was an oversight and provided a figure of 10.76 cents/kWh.
The Dominion letter also did not provide its competitors’ current electricity prices for comparison. CLC’s new residential rate, for example, is 1.5 cents/kWh lower than Dominion’s for July 2010 through January 2011. NSTAR’s residential rate for July 1 through December 31, 2010 is 7.98 cents/kWh, also 1.5 cents/kWh lower than Dominion’s.
“What we’re trying to say in the letter is their current offers are only six-month offers, and the price we’re offering is a low offer through a May 2013 meter read,” Mr. Donovan said. “We think it will appeal to people who want fixed rates for a long period of time and want to avoid the ups and downs in prices.”
Currently neither CLC nor NSTAR is offering a long-term rate.
“Over time, any long-term offer may be higher or lower than the current six-month basic rate because of fluctuations in the fossil fuel market on which electricity prices are based,” CLC’s consumer advisory explained. “For example, if the price of natural gas drops, so will the price of electricity. If the price of natural gas rises, electricity prices will also increase.”
After getting caught in a volatile, high-priced market in late November 2005 after hurricanes Rita and Katrina crippled natural gas production in the Gulf of Mexico, CLC and ConEd changed tactics in 2007, switching from a one-year rate to six months, and going from single-point procurement to a portfolio management approach.
“There is no way to predict if energy costs will rise or fall over the long-term,” the CLC consumer advisory says. “What might look like an attractive long-term offer now may seem overpriced when the basic six-month rate adjusts in January and July. Conversely, if energy prices rise, the price of a long-term offer might be below the basic six-month rate.”
If prices drop and Dominion customers with a fixed electricity price want to cancel before the contract term is up, they would be charged a $50 fee. CLC and NSTAR do not require customers to have a contract, or provide advance notice, or pay a fee to exit.
For customers who prefer pricing stability for more than a six-month period, regardless of market fluctuations, a long-term offer is worth consideration, the CLC consumer advisory says.
Since July 2001 CLC has kept program benefits local, investing over $50 million in energy efficiency services for the residents and businesses of Martha’s Vineyard and Cape Cod, according to a press release announcing the new rates.