When changing energy suppliers, check the details

Gloria Levinson was expecting big savings when she shifted her power supplier from Peco, but her rate has risen dramatically this year.
Gloria Levinson was expecting big savings when she shifted her power supplier from Peco, but her rate has risen dramatically this year. (REID KANALEY / Staff)
Posted: May 15, 2011

Gloria Levinson has some advice for Peco Energy Co. electric customers like her who bravely embraced deregulation this year and switched power suppliers:

Take a close look at your electric bill. Very close.

"I'm unhappy," she said.

The Havertown retiree thought she was getting a big discount when she switched suppliers in February, signing up with a Brooklyn company whose quoted rate was 14 percent less than Peco's default-service price for those who don't shop.

Levinson chose Respond Power L.L.C., whose variable rate was among the lowest posted with the Pennsylvania Public Utility Commission.

"Based on our excellent history, you may save up to 10 percent annually," the company told Levinson in a letter.

Not at this rate.

Unbeknownst to Levinson, Respond Power's variable rate has increased dramatically this year. While Peco's rate has risen less than 1 percent, from 9.92 cents per kilowatt-hour to 9.99 cents, Respond has boosted its prices by 14 percent since January, from 8.49 cents to 9.69 cents this month.

Its rate is now among the highest of more than 26 suppliers competing for Peco customers.

"It's market-driven," said Saul Horowitz, chief executive officer of Respond Power. Variable rates are just that - they can change every month.

Levinson was unaware of the increases because, contrary to PUC regulations, Respond did not list its price per kilowatt-hour on its portion of the monthly Peco bill.

In reality, Levinson's savings during the two months Respond has been supplying her power amounted to a meager $2.52.

Levinson said the supplier responded curtly to her complaint: "They said, 'We don't put the rate on the bill.' "

They should. PUC spokeswoman Denise McCracken said suppliers were required to include the price per kilowatt-hour on the bill.

On Friday, Horowitz blamed Respond's contracted billing vendor for the lapse, and he said Respond would take over the function. "This will ensure that all necessary info is clearly defined on each customer's bill," he said in an e-mail response.

Irwin A. "Sonny" Popowsky, Pennsylvania's consumer advocate, agreed with Levinson's advice: "People need to look at their bills."

Under the state's Electric Choice Act, which took effect Jan. 1 in Peco territory, traditional utility companies such as Peco became solely distributors of power - "wire companies." New Jersey and Delaware have similar systems.

Though the wire companies still handle billing and customer service, customers are free to choose a supplier that generates the power, which accounts for the biggest part of a residential bill.

The PUC requires Peco to provide basic generation service at no markup for customers who don't want to shop. Dozens of suppliers have jumped into the market, most of them offering discounts from Peco's commodity price. They've signed up 288,000 of Peco's 1.6 million customers.

Max D. Abrams, an insurance broker who lives in West Whiteland Township, Chester County, was among the customers who switched.

Like Levinson, Abrams became disenchanted once he took a closer look at his bill.

He signed up for a six-month fixed rate from Gateway Energy Services Corp., of Montebello, N.Y. The fixed rate of 8.9 cents per kilowatt-hour appealed to him because it protected him against the capricious fluctuations of a variable rate.

But when he looked closely at his bill, he discovered that more than half his savings were consumed by an additional 6 percent sales-tax charge, a fee that was not included in his bills when he was a captive Peco customer.

Incensed at what he considered a hidden charge, Abrams complained to the PUC's Bureau of Consumer Services. In a grammatically challenged letter, the bureau dismissed his complaint:

"It is considered the customers responsibility to inquire any additional taxes or charges they would receive in addition to any discounts on their generation prior to agreeing to the service," responded the unnamed bureau employee.

Actually, under state law, the utility bills of a primary residence are exempt from sales tax (though vacation homes, commercial and industrial utility bills are not).

After The Inquirer showed Abrams' bills to Popowsky, his office contacted Gateway, which quickly acknowledged the error and promised to correct the bill and process a refund.

The company said as many as 5,000 Gateway customers who signed up between November and February may be affected by the overcharge, which it blamed on a software glitch that misidentified some residential customers as commercial.

"Gateway will refund all customers who are affected regardless if they contact us or not," said Darlene Hyde, a Gateway spokeswoman.

The PUC's McCracken said the consumer-services bureau is reviewing why it dismissed Abrams' complaint.

"The bureau strives to provide excellent customer service and regrets if this was not handled properly," she said, noting that few customers had complained to the PUC.

Abrams said he is more wary now and unsurprised that only 16 percent of Peco's residential customers have opted to switch - that the promised savings may not be worth the hassle.

"Ultimately, it's just going to discourage people from choosing alternatives if you have to watch your bill each month," he said. "It's not worth the effort, considering the savings."


Power Shopping

Peco Energy Co. responds to customer questions at www.pecoanswers.com

Pennsylvania's Public Utility Commission explains electrical choice and lists alternative suppliers at www.papowerswitch.com

The Pennsylvania Office of Consumer Advocate will mail a Peco shopping guide for free: 1-800-684-6560.


Contact staff writer Andrew Maykuth at 215-854-2947 or amaykuth@phillynews.com.

 

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