In another sign that the market for electricity shopping is heating up for Maryland residential customers, BGE Home launched a fixed-price product on Monday that's more than a penny per kilowatt-hour lower than what Baltimore Gas & Electric is charging from now through May. At 10.25 cents per kilowatt-hour for two years, it's the cheapest competitive offer for BGE customers I can find. It's a decent offer -- subject to the cautions I give below. So is BGE Home's one-year deal of 10.35 cents per kilowatt-hour. (This includes costs for generation and transmission. You pay another 2.5 cents or so for delivery.)
The deals show that wholesale electricity prices continue to edge down from their highs in 2008, thanks to a slowing economy that has reduced demand.
BGE Home, which like BGE is owned by Constellation Energy but is less regulated, has sold fixed-price natural-gas contracts for years. But it has never sold electricity until now. The company joins Washington Gas Energy Services and Dominion Retail in hawking kilowatts that are cheaper, at least for now, than the default BGE product most households get. BGE Home and other companies can undercut BGE because BGE bought much of its juice for this year in 2008 at high, 2008 prices.
"It was a business decision based on the current market prices," says Jack Bode, BGE Home's vice president of sales. "We thought it was time to roll it out." They're limiting the offer, being marketed as from Constellation Electric, to the first 5,000 households. It's kind of pilot program, and Constellation may start selling residential juice under the same name in other places.
Why would Constellation let BGE Home undercut BGE? The dollars aren't that big; this gives Constellation experience selling residential electricity that it can apply in other markets; and these offers are also a signal that BGE's standard price will be coming down, too. Which is to say that it's impossible to tell whether you'll save money vs. the standard BGE offering over the life of these contracts. So far we know what BGE's standard price will be only until May.
I've already locked in with a 10.9-cent offer from WGES for two or three years. (I thought it was two but my statement says three.) Thanks to a high early-cancellation fee it doesn't make sense for me to switch. But if I were starting from scratch I would take the two-year, 10.25-cent offer from BGE Home. It's a decent amount lower than BGE's standard price of 11.527 cents between now and June. (Most houses ought to save at least $10 a month based on that difference.) And it'll shield you from a spike in energy prices if the economy revives, although there aren't many signs of that happening.
However, you need to be careful of two things. 1) There is a hefty early-cancellation fee on all alternative offers, including BGE Home's.
UPDATE: CORRECTION: As a commenter points out, Dominion Retail's offer of 10.37 cents through the end of 2010 has no early-cancellation fee. You can switch anytime.
2) BE CAREFUL when the contract expires in 12 months or 24. Like BGE Home's natural-gas contracts the electric contract automatically rolls over to a new deal unless you tell them to cancel and go back to the regular BGE offering. Many households got burned in the winter of 2008/2009 when their BGE Home gas contract rolled over to a fixed-price deal when prices were at their peak. Locked in for a year, people paid hundreds of dollars more than they would have if they had switched back to the standard BGE natural-gas price, which let households benefit from plunging spot prices. Put a reminder on your calendar in a year or two to make sure the rollover deal is any good.