How to Save on Your Con Edison Bill

In the 1990’s, deregulation of the energy markets in New York seemed like a great idea and quickly gained momentum. The move would open an otherwise monopolistic market to competition and allow third-party energy suppliers, known as Energy Service Companies (ESCOs), to compete with traditional utilities like Con Edison. The prevailing thought was that competition would drive down prices and increase the availability of budget-certain fixed-rate plans and green energy options not offered by ConEd, which charges an often volatile and unpredictable variable rate. As the turn of the century approached, the New York energy markets were deregulated and New Yorkers ushered in a new era of consumer energy choices with high expectations.

Things didn’t quite turn out as planned. As ESCOs entered the marketplace, ratepayer complaints started pouring in. Consumers accused the ESCOs of overcharging them, switching them from their traditional utility providers without permission, charging them hidden or monthly and enrollment fees, and even pretending to represent Con Edison to deceive them into signing costly contracts. As complaints started to pile up, the public became leery and came to view the ESCO industry as a scam and one which should be avoided. Overwhelming consumer discontent and outrage prompted the New York Public Service Commission (PSC) to launch an investigation and wage an all-out war with the ESCOs. Citing their investigation, which found that consumers were overpaying ESCOs hundreds of millions of dollars, the Commission prohibited the energy service companies from selling to low-income consumers and threatened to “de-deregulate” the industry as a whole.

While the New York energy market has remained deregulated, the question is, Should savvy New Yorkers stay away from the ESCO market? Is the dream of consumer energy choice and lower electricity prices dead in New York?

At least two companies disagree. Choose Energy and PowerSetter are on a mission to inform and empower consumers on their electricity choices while giving them the opportunity to compare ESCOs, their prices and plans. They encourage consumers to learn about the process, shop around, and take advantage of the competitive marketplace in a smart way, avoiding all the major pitfalls.

In business since 1998, Choose Energy has helped hundreds of thousands of consumers choose alternative energy providers. The company, whose board members include former Expedia CEO Erik Blachford, is backed by Kleiner Perkins Caufield & Byers which is one of the “largest and most established” venture capital firms in the world, according to WSJ. This visionary venture capital firm had also funded early Google and Amazon and its backing provides a much-needed credibility boost to the ESCO industry.

Start-up PowerSetter provides New Yorkers with the comparison tools and information they need to make an educated decision regarding their energy choices. Specializing in energy price comparisons in the New York and Connecticut markets, PowerSetter negotiates with ESCOs to secure exclusive deals and extra discounts. The company also carefully selects only the most trusted and reliable ESCOs (out of several hundred) and their plans, eliminating those with any hidden, monthly, and enrollment fees, which is a major source of complains. PowerSetter also sends out a timely reminder about contract expiration date, so you can avoid being overcharged, which is another major source of complains.

Both the New York Public Service Commission and Con Edison are also trying to help consumers by offering their own comparison and information sites. Through poweryourway.com, ConEdison offers consumers information and tips on how to choose an energy supplier but there is no information about pricing. While the PSC website, newyorkpowertochoose.com, does offer pricing and state whether the plan has a cancellation penalty, it doesn’t always show monthly, enrolment and enrollment fees.

ESCOs also come in all shapes and sizes. While some of them are small operators, many are surprisingly large. Exelon, the parent company of Constellation Energy, is twice as large as ConEd. Direct Energy, another example of a large alternative energy supplier, boasts 6,000 employees and 6 million customers in Canada and the United States.

Now that you know where to look for more information, pricing, and supplier alternatives, the question is, how can savvy New Yorkers take advantage of and benefit from the competitive market to, get lower rates, lock in fixed-rate plans, and reduce their Con Edison bill?

Here is a 5-step guide:

1. Your first step is to learn how the process of electricity consumption and billing works. Generally speaking, it consists of two components: delivery and supply. Since ConEd owns the existing physical infrastructure, they are the only ones that can deliver electricity to your home. As a result, there is nothing you can do about ConEd’s delivery You can, however, choose another company for your electricity supply component, allowing you to obtain lower rates and lock in a fixed-rate plan—a choice not available through ConEd. This is where the ESCOs come in. It is important to note that no matter who supplies your electricity (Con Edison or an alternative supplier), ConEd will continue to deliver your electricity and be responsible for any interruption in service, outages, and even billing. You will still receive your bill from ConEd but if you switch suppliers, you will see your new supplier reflected in your monthly billing statement. The process of switching typically takes approximately 1 or 2 billing cycles to go into effect and consists of filling out the new supplier’s online application. No one will have to go to your home and you won’t have to make any in-person appointments.

2. Find out how much ConEd is actually charging you. Even if you decide not to switch, it’s helpful to know the details of your variable rate plan and how much you are paying for your electricity to Con Edison. Measured in kilowatt hours, or kWh, your supply rate, which is always variable if supplied by ConEd, is displayed on your bill. It typically looks something like this:

But 9.3¢ is not your true variable supply rate. If you look closely at your bill, you should be able to locate this disclosure clause:

What this means is that you need to add $1.20 divided by the number of kWh to obtain your true variable rate for the period. The number of kWh is also found on your bill and will be displayed in a format similar to this:

In this example, you would add your stated electricity supply cost of 9.3¢ to the $1.20 billing and payment processing charge, divided by 307 kWh. This will give you your true variable rate of 9.7¢ for the month.

More simply, 9.3¢ + $1.20/307 kWh = 9.7¢

3. Now that you know your true ConEd variable rate, you can shop around and compare it with the rates of budget-certain fixed-rate plans offered by the ESCOs. Go to Choose Energy and PowerSetter.com to compare energy rates, current offers and plans by reputable energy service companies. Avoid plans that charge monthly fees and know exactly what your early termination fee is. While both sites offer similar comparison features, PowerSetter only offers plans that do not have hidden or monthly charges. The site also indicates which plans are exclusive deals with extra discounts.

4. Now that you’re ready to make the switch, make sure you know when your contract lapses. Similar to your contracts with cable, cell phone, or credit card companies, the ESCO is free to increase your rate after your contract expires. You can easily avoid being overcharged by setting a reminder approximately 30 days prior to your contract expiration date. This will give you plenty of time to compare offers and plans prior to your contract expiration.

5. Now that you know your existing variable rate, compared plans and offers, and explored your choices from reputable companies, there is no reason to overpay for your electricity. You can make the savvy switch and enjoy greater peace of mind, lower rates, fixed-rate plans and savings.