CL&P Eversource Choice Rates Provide Price Security
Often an overlooked benefit of Connecticut’s electricity choice is the price security it can offer. Primarily when consumers think about the positive attributes of competitive power they are concerned with immediate savings gratification; how much money will I save on my next CL&P electric bill if I choose to purchase power supply from a competitive supplier. Indeed the amount of savings that competitive suppliers can offer versus utility default rates has had a high correlation with the percentage of customers who participate in energy choice markets. It has proven extremely difficult to almost impossible for competitive suppliers to gain new customers during periods where they could not offer prices below the default price for electricity. However, by taking a broader perspective, the price stability that long term competitive fixed rates offer can yield even greater savings, in addition to peace of mind, then the initial savings amount offered at any given time.
The advantages of price stability have been apparent in the CL&P Eversource market over the last several years. CL&P updates its default standard offer service rate twice a year on the first day of January and July. In 2015 and 2016 the rate has jumped significantly in January but then took giant drops in July for the second half of the year. The tremendous price volatility has made it hard for budget strapped consumers to manage their electric bills. While receiving a low CL&P electric bill in the second half of the year has been a pleasant surprise, receiving bills that jump up as much as 50% towards the beginning of the year has been a struggle for many.
Locking in a competitive rate for the long term can yield overall savings for residential CL&P customers while providing price stability on the electric bill. In 2016, the CL&P default rate will average out to $0.0805 for the year. The default rate was as high as $0.0955 and as low as $0.06606. Customers will not know what the rate will fluctuate to when the scheduled rate change takes effect at the beginning of 2017.
While securing a low fixed rate to manage the future fluctuations of the market price is seen as the best option for some, the majority fail to see these benefits. Despite competitive rate savings above 30% versus the CL&P default rate, only 31% of the residential customer base serviced by CL&P Eversource were purchasing their power from a competitive supplier as of April 2016. The remaining 759,000 customers who were charged the CL&P default rate chose not to enter into a competitive contract in hopes of a lower default rate taking effect in July. While the default rate did drop significantly in July, these customers saw electric bills that were in some cases twice as high as they could have been during the months of January through June.