Cooperative Review - January 2018
Vol68-1 January 2018

Be informed about Customer Choice and alternate suppliers

Customer Choice—what does that mean?

It means that you are able to choose the company that supplies your electric energy. Currently, about 5,500 of SMECO’s customer-members purchase power from alternate suppliers. The prices they charge for their power are not regulated, so alternate suppliers are free to set their rates at any level and can offer incentives to entice new customers. In some cases, the suppliers’ prices have been slightly better than SMECO’s, but in other cases they have not. So, before entering into a contract with a supplier, it is important that you compare the rate offered with the rate for SMECO’s standard offer service.

By comparing the cost of energy that SMECO provides with the cost of energy provided by alternate suppliers, we have found that, in total, the customers who switched from standard offer service have paid $2 million over the cost of purchasing energy from SMECO during 2017. That’s an average of more than $300 per customer. This is not to say that all these customers could have saved money by staying with standard offer service. Certainly some customers made smart financial decisions. But this is an average that holds true. So, if you are considering purchasing energy from an alternate supplier, compare rates and terms of service.

How does SMECO manage its energy costs?

SMECO purchases power on the wholesale market for all of its customer-members. Our power portfolio includes contracts with many firms, and we’re able to negotiate prices for specific days and time periods. SMECO doesn’t mark up its energy rates and makes no profit on them. As a customer-owned, non-profit cooperative, SMECO is committed to delivering reliable electricity at the lowest possible price.

Alternate suppliers’ representatives use a variety of sales techniques to sign up customers. You may have received phone calls or a door-to-door salesperson may have come to your home. In the past, some sales reps have told our customers that they’re working for SMECO, but that’s not true. As the local electric utility, SMECO is not allowed to market or promote standard offer service to customers. We are not allowed to state that standard offer service is preferable to supplies offered by other suppliers. But we are allowed to inform customer-members of the price and availability of standard offer service, and to show any of our customer-members a comparison of our standard offer service price and the price of electricity supply from a member’s current supplier.

Know the terms

Before entering into a contract with a supplier, be sure you understand the terms.

  • What is the exact price per kWh?
  • What does the price include? Are there any fees, taxes or charges that are not included?
  • Is there a monthly minimum or maximum usage?
  • Is there a fee for a credit check or a deposit?
  • What is the total price to compare for your estimated kWh usage? Use the amount of kWh on a recent SMECO electric bill. SMECO’s Standard Offer Service price to compare is the Energy Charge and the Power Cost Adjustment combined. In December, that rate was 7.0339 cents per kWh. (Don’t comparethe supplier’s rate to your total SMECO bill, just look at the cost of energy.)
  • Is the offer for a fixed rate, a variable rate, or a combination? If it’s a fixed rate, how long does it stay fixed? If it is variable, does it change based on the season, the time of day, or the amount of usage?
  • How long is the contract good for and what happens when it ends? Will you be charged a variable rate that is different?
  • Can the price change during the contract period?
  • Can you cancel the agreement at any time?
  • Is there a termination fee for canceling the contract?
  • What happens if you move?
  • Do you have to pay to switch to a different supplier?

Whether you receive an introductory offer with a low rate, a gift card, or a promise of big savings, make sure you understand the details before switching to an alternate supplier. 

For customers who use an alternate supplier, if the supplier changes its rates, the new rates must be made available to the customer 12 days before the end of the billing period. If you have an existing contract with a supplier, you should receive notice of the expiration date 45 days in advance, so that you can consider whether you want to renew your agreement or switch suppliers.

Be smart. Compare prices. Understand the terms of any contract you are being asked to sign. And—most of all—make a decision that is smart for you.

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