… Rates for power will decrease 11 percent for those who purchase electricity from the utility …
By Liz F. Kay, The Baltimore Sun
7:26 PM EDT, April 26, 2011
Customers who purchase electric power from Baltimore Gas & Electric Co. will pay about 11 percent less starting in June.
The average customer now pays about $146 a month, according to BGE spokeswoman Linda A. Foy. Now that BGE has locked in the final segment of its electricity supply contracts and the purchases have been approved by state regulators, the utility has confirmed estimates made last year that bills would decrease by about $16 a month.
From June through September, BGE customers will pay a summer rate of 9.9 cents per kilowatt hour (kwh) for electric supply. In October, customers will begin paying 8.9 cents per kwh. The combined decreases add up to a combined 14 percent decrease over last year. The current rate is 10.1 cents per kwh.
However, the Maryland Public Service Commission in December approved an increase in the rate that BGE charges to deliver power, which represents about a quarter of customers’ utility bills.
Given the delivery increase and the lower electric supply rates, customers should expect to pay about 11 percent less, said Mark Case, BGE’s senior vice president for regulatory affairs.
Paula Carmody, who leads the state Office of the People’s Counsel, which represents consumers before the PSC, said customers of other utilities — including Pepco and Delmarva Power and Light — will also see declines in electric supply rates.
The price drops are not surprising and are part of a trend that began several years ago, Carmody said.
But even after the decreases, customers are paying more than they did before rate caps came off in 2006, when the supply rate was 5 cents per kwh.
“It’s come down a bit. We’re glad to see that; I’m sure folks will be glad to see that,” Carmody said. “But it’s still not cheap.”
The majority of BGE customers continue to purchase electric supply directly from the utility, although nearly 19 percent of residential ratepayers have signed long-term contracts with alternative suppliers for power as of March, according to PSC statistics. BGE still delivers that power.
The difference in prices offered by the alternative suppliers and regulated utilities “is becoming narrow,” Carmody said. “We probably saw the biggest gap 18 months ago.”
The regulated utilities purchase two-year contracts twice a year, to hedge against big price spikes. Electric supply rates offered by utilities are now falling because older, more expensive contracts are expiring, she said.
To help customers compare prices, the People’s Counsel posts monthly lists of alternative suppliers’ offers on its website, http://www.opc.state.md.us. The list will soon be updated with the new prices charged by utilities.
Consumers have to decide for themselves whether an offer is right for them, but they should be wary of early-cancellation fees that can cost hundreds of dollars as well as automatic renewal policies, Carmody said.
Lower natural gas prices are probably the No. 1 factor driving down prices, BGE’s Case said, with greater supplies of shale gas in particular spurring reductions in wholesale electric prices.
“Certainly the economic downturn has been a factor, although we’re beginning bit by bit to start to rebound,” he said.
Energy efficiency programs also have lowered demand for electricity, putting downward pressure on prices, Case said.
“A combination of more plentiful supplies and reduced demand are adding up to reduced energy prices,” he said.
Case believes prices will remain steady for a few years.
“I do think now we’re starting to see utility prices hit the bottom of the trough and [are] looking at more stable rates for the next couple of years,” he said.
Copyright © 2011, The Baltimore Sun