Time to plug into lower rates?

Company reaches out with offer less than Nat’l Grid’s standard rate

John Howell
Posted 2/26/15

Like 500,000 Rhode Islanders, Kellie Bryda of Cumberland received a letter within the last week from North American Power offering relief from the 28-percent increase in the cost of electricity as …

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Time to plug into lower rates?

Company reaches out with offer less than Nat’l Grid’s standard rate

Posted

Like 500,000 Rhode Islanders, Kellie Bryda of Cumberland received a letter within the last week from North American Power offering relief from the 28-percent increase in the cost of electricity as provided in the standard offer by National Grid.

North American is offering a fixed rate of 8.99 cents a kilowatt-hour for a one-year contract. The offer expires March 15. The standard offer provided by National Grid increased from 8 to 10.72 cents as of Jan. 1.

North American’s mass solicitation may be the first marketing salvo from one of the 20 companies that currently sell electricity to Rhode Island residential customers, according to Public Utilities Commission records. More offers could come, but Bryda decided not to wait. She looked at her bill for January and found the cost close to what she would be paying in the middle of summer, when her central air conditioning would be humming.

After consulting with her brother-in-law, who looked over the offer, Bryda went online and registered to buy her electricity from North American. She estimated her savings at $200 a year, “which in my opinion is a lot of money.”

But she had apprehensions.

“What is going to happen next year? Will it still be lower?” she added.

That’s a question a lot of people may be asking.

That’s an unknown. But, as Bryda pointed out, she can go back to the standard offer provided by National Grid, or choose to buy from another supplier.

Since the purchase of power was deregulated in 1996, Rhode Islanders have had the option to buy their electricity from a company other than National Grid. In fact, as National Grid spokesman David Graves emphasizes, the company is not in the business of selling power. Its business is to deliver power. It is required, however, to provide a “standard offer,” which becomes the cost of electricity unless the customer opts to buy elsewhere.

The amount paid for the standard offer goes directly to the supplier of the power. It’s a pass through, and National Grid doesn’t profit, says Graves.

The cost of power, whether the standard offer or from another provider, appears on the National Grid bill, and payment is made to them. National Grid remains the point of contact regardless of where the power is purchased. If there is an outage, the customer contacts National Grid.

Although there is competition over the cost of electricity, Graves said, “It hasn’t been a robust market on the residential side for years.” Of National Grid’s 485,000 customers, he said about 25,000 are buying power elsewhere. Most of those, he said, are commercial and big users. The homeowner using an average of 500 kilowatts a month really hasn’t been a player…maybe until now.

According to Lt. Gov. Daniel McGee, who is seeking to promote competition in the supply of power as a means of helping residents and small business, the percentage of customers buying from other than the company delivering the power in other states is much higher than Rhode Island. The spike in the standard offer has triggered not only customers to look at their electric bills but suppliers to sharpen their pencils and gain new business.

Graves, one of those who incidentally received the North American letter, offered some advice. He urged customers to read the fine print.

“Be knowledgeable and make sure it is in your best interest,” he said.

First Point Power, based in East Greenwich, is a provider of power specializing in the commercial and high-end user sector. Andrew Litchfield, associate with the company, said First Point focuses on consumers using 250,000 to 30 million kilowatt-hours a year, including schools, hospitals, shopping centers and commercial entities. He said First Point rates average in the high seven-cent to low eight-cent range, depending on the terms of contracts that can be for 24 months.

Litchfield is not surprised by North American’s bid for residential customers.

Because the standard offer was so attractive, he said, “Until 2013, there wasn’t an opportunity to come into this market.”

The reasoning for the jump in the standard offer is a constriction in the supply of natural gas, which is used to generate about 40 percent of the power used in New England. Residential and commercial users of natural gas are given priority, so during cold months when there is a demand for gas for heating, power plants can’t get enough gas to generate electricity. Some plants close and others switch to oil, pushing costs up. Usually, as a result, the cost of electricity goes up in the winter and drops in the summer. So as to lessen the increase this winter, the PUC voted to spread the increase over the next year.

But if North American can buy and resell power at 8.99 cents, why can’t National Grid do the same thing?

Graves points out that National Grid buys at different times of the year in an effort to stabilize prices. Purchases are made well in advance to delivery.

Tiffany Eddy, spokeswoman for North American, said the company “buys as much as they can on the market. It’s how they’re buying it. They’re able to economically purchase it and pass along the savings to their customers.”

She said the company is limiting the offer to the first 10,000 customers who register by the March 15 deadline. She could not say yesterday how many have already signed up.

PUC spokesman Tom Kogut said, “It’s not that National Grid has failed.” He said the company is following procurement procedures set forth by the PUC and that the standard offer is arrived at under different time structures.

“They’re guessing and gauging where the market goes,” he said. “National Grid is offering the standard rate on the current structure, and we’re not seeing anyone less than National Grid.”

Ironically, Kogut has seen a lower rate, as he, too, received the North American offer. He pointed out North American is not subject to regulation and therefore he does not know under what provisions they bought power for resale. He read through the North American offer and gave them “kudos” for citing the standard offer service billing adjustment. Customers leaving the standard offer are subject to a one-time adjustment that could either mean a charge or rebate in their bill.

He explained the cost of electricity fluctuates monthly. The cost this month is 18 cents a kilowatt-hour, but in May it drops to 6.9 cents. Under a complicated formula, the adjustment takes that into consideration so the customer pays for what has been used rather than a monthly average.

Litchfield is not surprised by the disparity between the standard offer and the North American rate. Referring to National Grid, he said because they are buying power long before it is delivered, “Their rates lag what the current market is.”

Additional information on the North American Power offer is available at napower-ri.com or by calling 877-572-4185. The company is based in Norwalk, Conn. and, according to Eddy, sells power in all New England states with the exception of Massachusetts.

Comments

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  • allent

    a reseller cannot make a profit unless they gouge you somewhere else as in hidden fees. Focus on the kwhr rate and miss the extra fees is what they hope for.

    How many long distance phone resellers are there? none.

    Unless they are a producer of power, I would stay far away from scammy resellers.

    Saturday, February 28, 2015 Report this

  • HerbTokerman

    This company is a scam.

    It is a classic bait and switch scheme.

    It is a variable rate, the low rate is only for the first month then they jack it up.

    Sunday, March 1, 2015 Report this

  • Dickhead

    This is a joke With North American Power

    What they are not telling you is that NGREED

    WILL CHARGE YOU UP TO $150 to switch to a

    Third party supplier

    Don't believe me, the notice is on ngrid website

    Under suppliers policies for switching

    Plus NAP WILL CHARGE YOU 0.18c after

    Your contract us up HOPING you forget you are

    In a contract till its too late !

    Nap recently fired the network of 4000 people after they

    Brought 100,000 customers into their business

    With no real excuse

    Please watch out find a compamy that has a

    A+ rating with the BBB before you switch

    There are 5 Class actions lawsuits in RI

    AGAINST North American Power

    For bait and switch

    Be careful people

    Richard

    Monday, March 2, 2015 Report this

  • KathyS

    Deregulation is NOT A SCAM ...But being an EDUCATED CONSUMER is IMPORTANT!

    The deregulation of energy gives consumers great freedom of choice and the potential for SIGNIFICANT savings on their Electric (and in some states Gas) Supply Rates is absolutely TRUE..

    With that said, Consumers do need to take a bit of time to ask a few important questions, and be certain they understand the answers.

    The First two questions should be:

    1. Does the Supplier have a Contract?

    If so what will happen if a Customer falls "out of contract" meaning the Customer forgets/neglects to renew as required in the contract)

    2. Does the company ever Charge Early Termination Fees ?

    If the answer to either questions is yes, I STRONGLY recommend that you look elsewhere!

    FYI - North American Power Does have a Contract that INCLUDES Early Termination Fees and Worse, if a customer does not Call or renew on-line PRIOR to their contract expiration date the customer is "out of contract" and they will AUTOMATICALLY BE SUBJECT TO THE PREVAILING VARIABLE RATE... THIS IS NOT GOOD FOR CONSUMERS

    There are energy suppliers that put Integrity First! I know of one that does not use contracts and does not charge early termination fees! They have been in business for 10 years and are rated A+ by the Better Business Bureau.

    Do your homework...

    Monday, March 2, 2015 Report this

  • PeterS

    Beware of North American Power

    (3) lawsuits already in Rhode Island

    I agree they expect you to forget to renew your

    Contract to get switched to a high variable rate

    I have a friend at the Villa Restaurant in W Warwick

    Who ended up paying $11,000 higher in a (6) month

    Time frame BEWARE OF NAP i just checked their

    BBB RATING D-

    If you really way to save money on your energy cost

    There are companies that have integrity

    AMBIT.com. 0.1255 BBB A+

    ACN.com 0.1069 BBB A

    Viridian.com .0858 BBB A+ W/110% guarantee

    Ngrid rate till december is .10248

    Make your choice wisely

    PS

    Tuesday, March 3, 2015 Report this