The Lowdown On Energy Companies

If you live in the PSE&G or JCP&L service areas your mailbox has probably been stuffed this week with mailers from companies trying to sell you cheaper electricity than you are getting from your utility.

Based on questions from readers, a lot of people are confused about these offers. Here are some quick answers to help you find your way through the sales pitches.

Q. Who are these companies like Constellation Energy, Dominion Energy, Gateway Energy, Green Mountain Energy, South Jersey Energy, Verde Energy and Viridian Energy?
A. These are energy resellers, who along with a handful of brokers and marketers, are licensed by the New Jersey Board of Public Utilities to buy power on the wholesale market and sell it directly to consumers.

Q. Why would I change energy supplier?
A. You might be able to save money, because right now electricity and natural gas prices are much cheaper on the spot market, where these companies buy power, than the regulated price for power passed along by utilities.

Q. If I switch, what happens to my monthly bill. Will I be billed separately for electricity?
A. You will get the same utility bill as normal from your existing utility company. The only difference will be the name of your new energy supplier will also appear on the bill, along with the new kilowatt hour (Kwh) price for electricity. Your utility will continue to be paid the same fees for distributing the power, which will show up on the top of your bill. The utility companies will continue to make service calls, fix problems like tree limbs knocking down power lines, as well as respond to any power outages.

Q. Will it affect the electric meter in my house, or the outside wires and pipes?
A. Your electric meter and the wires and pipes connected to your house will not be affected.

Q. How do I know which deal to choose?
A. Take a look at an old winter and a summer utility bill to see how you electricity you typically use. Note your "cost per kilowatt hour (kWh)" in each season. Get offers in writing from several companies so you can compare the price per kilowatt hour they are offering you, as well as the terms and conditions of their contracts.

Q. Are there any risks to changing energy supplier?
A. The number one risk is that the cost of the regulated energy your utility charges becomes cheaper than that provided by your new energy supplier. The regulated price will next reset on May 31, 2011. If it is cheaper, you can always change back, but some companies charge an early cancellation fee.

Q. What should I be careful of when dealing with a competitive energy supplier?
A. Look for hidden costs. For example, check if the "estimated savings" you are quoted includes the required 7 percent sales tax, if it doesn't add it in.

Q. How will I know if the company that contacts me is legitimate?
A. The Board of Public Utilities has a list of licensed energy suppliers on its website at state.nj.us/bpu/commercial/shopping.html. Also, the Ratepayer Advocate has advice for shopping for electricity at state.nj.us/rpa/shop.htm.

Each company has its own marketing strategy. Some are selling through customers called "affiliates" who sell to neighbors and friends; others use door-to-door sales people; telemarketers; the Internet and direct mail. According to the New Jersey Department of Consumer Affairs there have been no complaints about their business practices.

Q. What happens if I cancel my contract, or it expires?
A. If you cancel your contract your utility will automatically convert your power supply to the regulated service that they always offer customers. You will have no interruption in service. New Jersey does not allow automatic renewal of energy contracts, but if you fail to take action, your supplier will continue to provide you with power on a month-to-month basis.