Switching Electric Companies in New Jersey

by admin on September 20, 2011

Now that competitive electric rates are yielding savings versus traditional utility default rates, more and more New Jersey residences are switching their electric companies in order to save money. As of July 2011, the NJ Board of Public Utilities reported that 8.6% of residential electricity customers have switched electric companies. If you have not looked into switching your electric supplier you should start by comparing electric companies and their rates.

The New Jersey electric switch rate, though relatively small, is healthier than it appears when considering the fact that just two years ago competitive electric companies were not offering service to residential companies. Due to this reality, New Jersey electric choice is not well known by the masses. Many people are surprised to learn that electric choice at the retail level has been active since 2003. Until just a few years ago, the only customers taking advantage of the competitive market were large businesses. Electric companies targeted the state’s largest power users as they got their feet wet in the market. Fast forward a few years later and competitive energy companies are plunging into the marketplace offering service and competing for small businesses and residential customers.

One of the biggest myths about New Jersey electric choice is that the competitive electric companies are competing against the utility companies PSE&G, JCP&L, Atlantic City Electric, and Rockland Electric. The truth is that these utility companies are strictly responsible for delivering the power to homes and businesses, which includes the maintenance and management of the power lines and wires. Electric choice has created two different types of companies relating to your electric bill; your local utility company responsible for electric delivery, and the competitive electric supplier who your purchase your energy supply from. The utility companies want their customers to shop for lower electric rates.

Customers who have not shopped and selected and alternative electric supplier pay a default rate to the local utility. However, the utility does not profit from the default rate. Instead the revenues from the default rates, named the basic generation service rate by the NJ BPU, are passed through to competitive electric companies who have won previously held auctions for the right to service default rate payers. Even if you have not selected an alternative electric supplier you are already buying your power from one through the state’s basic generation service plan. So if you can find a lower electric rate by shopping on your own, it makes sense to do so as the result will simply be a cheaper electric bill.

In most cases, switching electric companies does not change how you receive your monthly electric bill. You will continue to get your bill from your local utility company. The competitive rate that you select will simply replace the default supply charges on the electric bill. The PSEG bill and Atlantic City Electric bill clearly states which rates fall under the supply charges. The supply charges on the JCPL bill are the generation and transmission charges. Switching electric companies will not end your relationship with your local utility company. In fact, the local utility companies will remain the company you call for in case of power failure or other emergencies no matter which electric supplier you choose for the foreseeable future.

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