Discount power suppliers target N.J.

In a marketing flurry that may presage what's in store for Peco Energy Co. customers later this year, discount power suppliers are jolting New Jersey residents with offers to undercut the prices of traditional utilities.

At least three energy suppliers have launched campaigns to sign up residential customers in the Garden State, the first time that mass-market discounters have shown much interest since New Jersey deregulated the electric industry in 1999.

The third-party suppliers, taking advantage of low wholesale electric prices, are offering discounts of up to 12 percent off standard utility rates. They can beat the prices of utilities like Public Service Electric & Gas Co., whose rates are based on long-term power-supply contracts that were signed when prices were higher.

With inducements such as department store gift cards, the new suppliers are enticing customers to switch.

"We very much want to build a brand in the New Jersey retail market," said Lawrence McDonnell, a spokesman for Constellation Energy Group Inc., a subsidiary of the company that owns Baltimore Gas & Electric Co.

Last week Constellation mailed appeals to 2.4 million customers of New Jersey's two largest utilities, offering $150 Target gift cards to those who sign up for 30 months. Constellation also touts a Facebook application through which customers can initiate the switch.

At least two other discounters are actively courting residential customers. Verde Energy USA Inc. is offering $50 cash bonuses for a deal whose rate varies according to market conditions. Gateway Energy Services Corp. is offering fixed-rate and variable-rate deals.

Customers have taken notice.

A year ago, a mere 213 New Jersey residential customers had switched to discount suppliers, out of 3.3 million households served by the state's four electric utilities regulated by the Board of Public Utilities.

As of June, that number had increased to 16,000 - including 11,000 residential customers of PSE&G. It is not yet a tsunami, but the utility's latest figures indicate that the number has doubled since June, said Karen Johnson, a PSE&G spokeswoman.

"Ratepayers are doing their homework and learning that financially attractive options exist in the marketplace," said Lee A. Solomon, president of the New Jersey utilities regulator.

In New Jersey and in Pennsylvania, traditional utilities say they are neutral about what firm supplies their customers with power.