In recent months the state of Delaware has seen a surge in electricity shopping activity as more consumers become aware of their options to purchase power from a competitive supplier. As an energy choice state Delaware allows alternative energy suppliers to solicit business by offering energy rate products varying of different contract lengths and power sources. Prior to energy choice every customer in the state was required to purchase their power supply from Delmarva Power, the one regulated utility in the state. While Delmarva Power continues to operate as the power delivery company for all of their customers, those customers now have the ability to buy competitive power from suppliers who have been licensed by the Delaware Public Service Commission.
Delaware energy choice laws has essentially taken the power procurement responsibilities away from Delmarva Power and has given it to the consumer. This allows the consumer to buy electricity rate plans that best fit their personal desires. Families living in large houses who believe they will not be moving anytime soon might decide to purchase a fixed rate for three years that will eliminate their exposure to volatile energy market swings. Meanwhile a college student renting an apartment for a semester might elect to to find a rate with a low three month introductory offer. Customers who are more concerned with the environment than their energy budget can decide to pay a premium for electricity derived by wind turbines.
While the supply side of the electricity market has been deregulated, the distribution component remains regulated. This means that Delmarva Power not only continues to deliver power to their customers, but also responds to power failures and is responsible for sending the monthly invoice. In fact, in most cases, even if a customer switches to a competitive supplier they will continue to only receive one monthly electric bill from Delmarva Power. The Delmarva Power electric bill is divided into the power supply competitive section and the delivery section which includes regulated charges. Customers that don’t shop the competitive Delaware electricity market pay the Delmarva Power price to compare rate. Shopping for a electricity rate that is lower than the price to compare is the easiest way for a customer to lower their Delmarva electricity bill.
Delmarva Power determines their price to compare default rate by holding an auction for competitive Delaware suppliers. These suppliers bid to provide power service to a portion of the price to compare rate payers. The Delaware energy choice law allows consumers to purchase power, thus leaving the price to compare rate, at any time. As a result energy suppliers who bid to be a price to compare supplier have to provide a premium in their pricing to account for a number of customers leaving at any time. Meanwhile, suppliers can offer fixed rates to individual consumers that more accurately reflect the current market conditions without a premium baked into the price. Often a competitive supplier might have an early termination fee associated with their rate offer which deters many potential customers. However, once you start to understand how the suppliers are able to offer lower prices, the justification of an early termination fee becomes more apparent.
Recent energy market price drops have presented opportunities for competitive suppliers to offer rates below the Delmarva Power default rate, resulting in potential lower Delaware electric bills for all customers who are still on the price to compare rate structure. Throughout 2016 the Delmarva Power price to compare rate ranged from 9.5 to 10.5 cents. Current competitive prices as of early 2017 are coming in below 8 cents. Delmarva Power reported in early October 2016 that 28,755 of their 278,486 residential customers, or 10.3%, were purchasing power from a competitive supplier. The remaining 89.7% of Delmarva Power residential customers were paying more on their Delaware electric bills than they could if they decided to participate in the state’s energy choice market place. By simply shopping for competitive electricity rates these customers could lower their Delmarva Power electric bills by as much as 18% while still receiving the same quality of power.
Even thought the Delaware residential electricity market has been slow to take off, the commercial side has seen high shopping activity. In the fourth quarter of 2016 Delmarva Power reported that 33.4% of business customers were purchasing power from a competitive supplier. In addition, more competitive suppliers are entering the market in an attempt to gain new customers. The increase in advertising activity should result in more new electricity choice customers, for both residential and business, throughout 2017. In January of 2016 there were 16 competitive suppliers providing power to Delaware residential customers and 36 suppliers providing power to business customers. By October 2016 those numbers had increased to 21 residential suppliers and 39 commercial.
When comparing competitive Delmarva Power electricity rates in Delaware customers should look at the price being offered as compared to the current price to compare. If the competitive rate is lower than the price to compare the customer will be able to lower their Delmarva Power electric bill. Customers should also pay attention to the term of the contract and the early termination fee, if any, associated with the contract. While the idea of agreeing to a contract and early termination fee might be scary to new electricity shoppers in Delaware, these customers should understand that it it the contract that allows to savings to be presented. Competitive suppliers are able to purchase the power on the wholesale market and sell it to customers with a small profit baked into the price offered. This can present substantial savings for consumers when compared to the Delmarva Power price to compare rate.