Letters advertising low electricity rates seem to fill my mailbox every few months.
These come-ons are from companies with innocuous and confusingly similar names, such as Think Energy, Direct Energy, CleanChoice Energy, or Just Energy.
Before even opening the envelope, however, every consumer should remember one basic fact: Cape Cod and Martha’s Vineyard are represented by the nonprofit aggregator Cape Light Compact, which negotiates a lower rate for its customers. Cape Light Compact is the default supplier for Barnstable and Dukes County. In other words, if you don’t select a supplier, you’ll get Cape Light Compact — and that’s a good deal.
Offers from other suppliers can sound persuasive if you don’t understand that.
I recently received an enticing sales pitch from CleanChoice Energy. It started out by telling me, “Energy deregulation in Massachusetts allows you to select the energy supply used to power your home.”
This is true. There are more than a dozen suppliers, which, along with the utility company Eversource, bring you your electricity. The list can be found on the Mass. Dept. of Public Utilities (D.P.U.) website.
If I pick CleanChoice Energy, the letter continued, I would be buying 100-percent clean energy — all from wind and solar — for a rate of 11.60 cents per kilowatt-hour. That did not sound too bad, but just to be sure, I called Cape Light Compact, which does consumer advocacy as part of its mission.
Maggie Downey, Cape Light Compact’s administrator, helped me to decode an offer such as CleanChoice Energy’s.
On the back of the first page of my letter from CleanChoice was an eye-glazing chart in fine print. For the consumer, Downey explained, the key information is listed in a line item titled “Price Structure.” There it states: “Variable month to month.” Translation: The 11.60-cents rate changes monthly. I got this offer in November and I can see from the D.P.U. website that the CleanChoice Energy’s rate in December has gone from 11.60 to 11.80 cents per kilowatt-hour in just one month.
The next line item, “Supply/Generation Price,” shows the rate itself, which is useful information only if you know what to compare it to. This requires checking that same D.P.U. website.
And finally, you’ll want to check the “Cancellation/Early Termination Fees” line. In this particular offer, CleanChoice Energy had no cancellation fee.
The last time I got suckered into signing up with a different supplier I picked Just Energy Massachusetts Corp., which had a cancellation fee before 36 months of $50.
Not that it mattered in my case, because I used Just Energy for years without paying attention to the higher rate. Using Just Energy cost me an additional $144 in 2019 over what I would have paid if I had done nothing and continued to use Cape Light Compact. My rate would have been 10.69 cents per kilowatt-hour instead of the 12.39 I was paying with Just Energy. If I had electric heat, the difference would have been much more consequential, Downey said.
As a municipal aggregator, Cape Light Compact can use the promise of a large number of customers to negotiate a good price from suppliers. Also, Cape Light Compact’s rates are fixed for six months. They will change on Jan. 1, 2020.
“We go out to bid and negotiate a contract for all our cities and towns,” Downey said.
Through a bidding process, Cape Light Compact selected NextEra Energy Services Massachusetts LLC as the supplier all its customers use. Its rate cannot be found on the D.P.U. website, because NextEra serves only municipal aggregators and not individual customers. But you can get the rate at Cape Light Compact’s website.
Eversource also has a supply base rate, which you can ask for specifically, because it’s not the default. Eversource’s rate is pretty low, too: 10.86 cents per kilowatt-hour. But that’s still more than Cape Light Compact’s 10.69.
Downey said that about 70 percent of the time since 2001 Cape Light Compact has offered a lower rate than Eversource’s base supply price.
Because this seems so complicated and confusing, I asked Downey if deregulation is just another way to deceive consumers into paying more.
Downey said no. Deregulation can help consumers — if they educate themselves.
“I think deregulation is good,” she said, because the law allowed the creation of municipal aggregators such as Cape Light Compact. There are more than 170 cities and towns in Massachusetts with municipal aggregators, she said. “You want to set it and forget it. We, as aggregators, can negotiate on your behalf.”
Cape Light Compact was formed in 1997, the same year that the Mass. Restructuring Act enabled towns and cities to establish municipal aggregators.
For those interested in green energy, the energy sources used by each supplier — that is coal, nuclear, wind, solar, etc. — are also listed on the D.P.U. website. But this is also not as straightforward as it seems. What I learned was that many suppliers, including Cape Light Compact’s NextEra, offer 100-percent green energy. But there is a kind of renewal energy product that encourages development of green energy locally in New England. This occurs when customers’ annual energy use is matched with Class I Renewable Energy Certificates (RECs).
An ordinary REC represents 1,000 kilowatt-hours that a wind or solar generator produces. Class I RECs, which must be from New England sources, are more costly. And municipal aggregators must decide how much they include in their product. On the high end, about 17 Massachusetts towns currently match 5 percent of their energy with Class I RECs, according to the Green Energy Consumers Alliance. Cape Light Compact’s board elected to offer only one percent Class I in the default product, Downey said.
Cape Light Compact consumers can, however, choose to buy energy that is 50 or even 100 percent matched with Class I RECs. Due to cost, these options are not very popular, said Austin Brandt, Cape Light Compact’s senior power supply planner. (It costs 11.99 cents per kilowatt-hour for 50 percent and 13.39 cents per kilowatt-hour for 100 percent Class I REC matches. These prices will change on Jan. 1.)
“People who are really passionate about it will seek it out, but it’s not the norm,” Brandt said.
At least Cape Light Compact spells it out. Other suppliers don’t. Even for experts in the field, it’s almost impossible to discern whether retail suppliers have any Class I RECs at all, Brandt said.