Thomas Pendleton is a partner at MacDonald Illig Attorneys and concentrates his practice on business matters, including preparing agreements and commercial litigation. These agreements include leases of oil and gas interests, covenants not to compete, and contracts governed by the Uniform Commercial Code.
Over the past several years, the cost of utilities has increased, along with the cost of many other goods and services. One of the ways that consumers and businesses may be able to save money is by choosing an alternative energy supplier. Alternative energy suppliers are available for both electricity and natural gas. Before making the decision to choose an alternative energy supplier, here are some issues to consider, as well as things to keep track of during the contract:
- What rate will the supplier charge? Electricity rates can be fixed, which means for at least three billing cycles or for the term of the contract, whichever is longer. Even with a fixed rate, you must know when your contract ends. Unless you act prior to the end of the contract, your fixed rate may change to a variable monthly rate. You should read your contract’s disclosure statement for the terms and conditions to find out what happens after the term expires.
- If you choose a variable rate, that rate can change by the day, week or month, depending on the terms in the supplier’s disclosure statement. If you select a variable rate, the rate may change with market conditions. If market conditions cause the price to go up, your rate will go up. If market prices drop, your rate may go down. Of course, fixed rates may also go up in accordance with the schedule determined by the Pennsylvania Public Utility Commission (“PUC”). Cold temperatures in winter or a heat wave in summer may increase electricity demand. These market conditions may cause an increase in utility costs, regardless of whether the rate is fixed or variable.
What is the price to compare?
An electricity distribution company’s (“EDC”) price to compare is the price per kilowatt hour (kWh) which the EDC will charge including charges for generation and transmission, the state’s gross receipts tax, and the utility’s charges for implementation of the Alternative Energy Portfolio Standards. The price to compare may be adjusted quarterly, but not seasonally. When a customer shops for electricity, the customer should ask competitive suppliers to provide the customer with the price to compare so the customer can make an apples-to-apples comparison. Also, ask how long the price is effective and verify if taxes or other fees are included in the price to compare.
Where can a customer find information on current supplier prices?
Many electric suppliers in Pennsylvania list their prices and other terms and conditions on the website, PAPowerSwitch.com. If a supplier is not found on this website, then the customer will need to contact the supplier directly. A customer should also ask for a supplier’s historical pricing information. Pennsylvania regulations require suppliers to provide up to two years of historical pricing data at a customer’s request.
Many of these same considerations exist for selecting a natural gas supplier. Rates and plans will vary based upon whether the customer is a residence, a small business or a large business. The natural gas supplier (which owns the wells or source of natural gas) and natural gas distribution company (which owns the pipelines that deliver the gas) each have their own pricing plans. These pricing plans may include introductory rates, cancellation policies and discounts available to certain customers.
Consumers and businesses who shop carefully and who understand the contracts being offered to them by the alternative energy providers may be able to save money on their utility costs. As with any contract, it is important to review the contract carefully and consult a legal professional if further guidance is needed.
For more information, contact Thomas Pendleton at MacDonald Illig Attorneys at 814/870-7624 or tpendleton@mijb.com.
