Although millions of Texas electric customers are saving money by shopping for their energy provider, there is still a big language gap when it comes to customer understanding of competition and choice, SaveOnEnergy.com President and Chief Operating Officer David Roylance told a forum on electric deregulation hosted last week by the Dallas Morning News. 

Roylance, a 25-year energy industry veteran, noted that, under customer choice, “costs have gone from being a source of profit for retailers to a destroyer of profit.”  Roylance explained that, before competition, electric utilities earned profit on their “rate base,” or their retail costs and physical assets like power plants and transmission wires, at a guaranteed rate of return.  That increased incentives for utilities to spend more on operations than needed, because it meant that they had a larger rate base on which to earn a profit.

Under competition, where electric companies only make money by getting customers to choose them, costs have to be as low as possible in order to attract customers with low electricity rates, while offering great service.  These lower operating costs will mean savings for Texas electric customers.

However, today’s energy suppliers still have a “language problem” when it comes to offering customers lower rates and new products under competition, Roylance added.  The industry still talks in kilowatt-hours, a measure of electric usage, but most customers do not think or talk in kilowatt-hours, Roylance said.  Customers think in terms of how much they spend on their monthly electric bill ($100, $150), or how much it costs to set the thermostat at 78 degrees.

Roylance noted that there are some “enabling efforts” underway for energy suppliers to talk in a language more meaningful to customers, and is optimistic that customers will see a shift away from cents per kilowatt-hour to a flat monthly rate in describing the cost of an electricity plan, and in comparing different products.

The lack of a consumer-friendly language makes it “very confusing” today for customers to compare electric rates and providers, Roylance added.  But also confusing for customers is the more than 100 offers available for residential customers from about 30 electric companies.

“SaveOnEnergy is part of the innovation that is trying to fill that gap,” in customer awareness and understanding, Roylance said.  SaveOnEnergy.com seeks out the attractive rates and providers, and posts the best electric rates and products in an easy to understand comparison, instead of a broad laundry list of general offers customers may see elsewhere.

Additionally, SaveOnEnergy.com allows customers to easily compare not just price, but also the many additional benefits that come with certain electricity plans.  While Roylance noted that the value-adding benefits available from some energy providers (airline miles, gift certificates, renewable energy, convenient payment options) are only in their infancy compared to where they will be a few years from now, these bonus features are still attracting customers to electric companies that might not have the lowest rate in the market.

Over 5,000 Texans shop for a low electric rate on SaveOnEnergy.com every month, and about half of these Texans are choosing a plan that isn’t one of the absolute lowest, because they’re opting for a green product, or a product with airline miles, or a bill credit for signing up.  “They’re searching for some other feature that meets their unique needs,” Roylance explained, and SaveOnEnergy.com lets customers quickly identify the features and prices of different plans in a straightforward and simple format, so consumers can click, pick, save, and join the progressive Texans that are benefitting from competitive electricity rates in Texas.

With customer choice forcing Texas electric companies to compete for customers’ business, Texas electric rates have gone from above the national average before competition, to below the national average.  However, that’s not the story that’s typically reported by the media, because the federal Energy Information Administration is using flawed data which underestimates the significant decline in Texas power prices since the start of competition, according to a new study by the Texas Public Policy Foundation (TPPF).

“Most competitive prices are considerably lower than what is reported in the federal government’s data,” said Bill Peacock, Director of the Foundation’s Center for Economic Freedom. “In fact, the average competitive price is below the national average, and consumers who exercise their choice can easily find rates that are lower than in our neighboring states.”

TPPF found that the average electric rate offered by electric companies in the competitive regions of Texas in December 2009 was 11.01 cents/kWh, while consumers could choose offers as low as 8.52 cents/kWh.  However, the federal Energy Information Administration (EIA) reported that Texas consumers paid an average of 12.26 cents/kWh in October 2009 (the most recent month of data).

For 2009, the EIA data shows a national average price of 12.06 cents/kWh.  According to EIA, the average Texas rate is 12.26 cents/kWh, but in reality, the average Texas rate in parts of the state open to competition is actually lower — only 11.01 cents/kWh.  Texas energy prices are thus below the national average in areas where Texans can choose their energy provider. 

Why does the EIA data show a higher Texas electric rate?  There are a few reasons, but one of the biggest reasons is the EIA blends rates from parts of the state open to competition with higher-priced rates at some of the monopoly utilities and cooperatives, some of which, as previously noted, have higher rates than competitive areas.

Not only are competitive Texas electric power rates lower than the national average, but competition has actually reversed Texas’ relative position versus the national average.  For instance, in 2001 just before competition started, the regulated average energy price in the parts of the state that would later be opened to customer choice was 15.8% higher than the national average, at 9.98 cents/kWh versus the national average of 8.62 cents/kWh.  Today, however, the average competitive price (11.01 cents/kWh) is 8.71% below the national average, while the average of the 15 lowest Texas offers (9.27 cents/kWh) is 23.13% below the national average.

The data shows that, over the past nine years, competition has kept Texas electric rates in check, resulting in Texas rates rising more slowly than the national average, and turning Texas from a state which had above average power prices to below average power prices.

Texas’ competitive electric rates also compare favorably with several neighboring states, as the average price of the 15 lowest offers in Texas is lower than the average price in New Mexico, Oklahoma, and Arkansas.  Furthermore, Texas power prices are lower — significantly in many cases — than the average price in the other four of the five largest states, such as New York (19.17 cents/kWh) and California (14.08 cents/kWh).

“Perhaps the lower price of electricity in Texas is one reason it has recently moved past New York and California as the home to the most Fortune 500 companies,” Peacock said.

Texans usually start to think about the size of their electric bills as summer heat approaches, but the arctic temperatures blanketing the State for the past few weeks have led to record power usage driven by customers with electric heating, and provide a good reminder that now is still a great time to save on your electric bill by shopping and switching to a new lower electricity rate.

The Electric Reliability Council of Texas (ERCOT), which includes the electric transmission lines for 85% of the state, reported that it reached a new record for peak winter power usage at 55,856 megawatts during the 7-8 a.m. period Friday.  That demand broke the day-old record of 52,001 megawatts set during the 7-8 a.m. period Thursday.

Before the recent cold snap, the winter demand record was 50,408 megawatts set Feb. 16, 2007.  The new record also far outpaces ERCOT’s forecast of peak usage for this winter, which was only 43,463 megawatts, or about twenty-five percent lower, as the forecast was based on normal weather patterns and reduced usage due to the recession.

While Texas is seeing record electric consumption for the winter, the usage is still shy of the annual peak demand which occurs in the summer due to heavy air conditioning usage.  ERCOT’s all-time peak demand is 63,400 megawatts, set this past summer on July 13, 2009.

“Most Texans will see higher February electric bills due to the weather-related consumption in January”, says SaveOnEnergy.com spokesperson.  “That makes it a perfect time to see if you can save money on your electric bill by shopping around for a lower electric rate”.

Many Texans may still be paying a higher rate of 12¢, 13¢, or even 15¢ per kilowatt-hour, based on when prices were higher and the economy was stronger.  With the recession and more competitive offers, energy prices have plummeted, and there are numerous plans available on SaveOnEnergy.com for 10¢ or less.

For example, customers in the Dallas-Fort Worth metroplex, served by Oncor, can use SaveOnEnergy.com to sign up for a six-month fixed rate of only 9.4¢ per kilowatt-hour.  A 12-month fixed rate, providing even more security against price spikes, is only 10.3¢.  In Houston, fixed price rates are as low as 10.1¢.

Using SaveOnEnergy.com to shop for a lower electric rate takes just a few minutes, and is hassle free.  All the electric companies on SaveOnEnergy.com have been thoroughly vetted so only reputable energy providers with world class customer service are listed, ensuring that customers don’t worry about their choice of energy supplier and savings.  With just a few clicks of the mouse on SaveOnEnergy.com, Texans can save hundreds of dollars per year on their electric bill, all without leaving the comfort of their own home.

California residential utility customers who use the least amount of electricity will have their electric rates raised in order to lower the rates for residential customers who use more power, under an order from the state’s Public Utilities Commission (PUC).  Unfortunately, although more California businesses will soon have the opportunity to buy power from an energy supplier other than their utility, legislation specifically prohibits the vast majority of residential customers for shopping for a low electric rate.  That means customers facing this new rate hike have no choice but to grin and bear it.

The Public Utilities Commission’s decision lifts a rate freeze imposed on residential customers in the two lower usage tiers, which was originally imposed during the 2000-01 energy crisis.  The PUC did not freeze electricity rates for residential customers in the three higher tiers of usage, and these customers have had to shoulder the share of any required rate increases because of the freeze for small volume customers.

In most states, when a rate freeze comes off, customers are given the option to choose a new energy provider to avoid the increase and save money.  For example, at PPL Electric Utilities in Pennsylvania, rate caps are expiring on January 1, 2010, and utility rates will rise about 30%.  However, customers are able to shop among more than half a dozen competing energy companies to find a lower energy price, and can save up to 20% on their bills.

California residential customers do not enjoy this right to choose their own energy supplier, so they cannot avoid the utilities’ rate increases.  Unlike business customers, whom we’ve noted will soon be able to shop for a low electric rate, residential customers in California are required to remain with the utility.  That means they can’t vote with their feet when the utility raises rates, especially when the increase can be seen as punishing energy conservation.

As noted by the San Francisco Chronicle, “Critics have complained that the change hurts people who conserve energy while helping those who don’t,” because it lowers, or subsidizes, prices for large energy users by making those who use less electricity pay more.

When customers can choose their energy provider, such inequities are not possible.  If customers feel that their electric company is treating them unfairly or charging a rate that’s too high, they can choose another provider and vote with their pocketbook.  This is the powerful tool that more California businesses will soon enjoy as the PUC allows more non-residential customers to shop starting in April, and will help businesses trim their energy costs.  Unfortunately, California residents still do not enjoy the right to choose their energy provider.

Consumer advocates and state regulators agree that competition in the energy industry is lowering electric rates for customers. 

Wholesale energy prices in the PJM region, which covers Pennsylvania to Maryland to Illinois, are 40% lower than they were at the start of the year.  Customers, however, can only take advantage of these lower rates if they choose a new energy provider, since the utilities are still charging rates based on last year’s record high prices.

In Texas, the Public Utility Commission noted that rates in competitive areas of the state, like Dallas and Houston, continue to fall.

Barry Smitherman, Chairman of the Commission, noted that “Competition has pushed down prices below those found in noncompetitive jurisdictions.”

As noted by the Wall Street Journal, “The economic downturn, combined with a boom in natural-gas output, has driven wholesale energy prices sharply lower in the past year, inspiring an increasing number of recession-strapped households to shop around for cheaper rates.”

“All of a sudden, we’re in a situation where we have competition working,” agreed Ohio Consumers’ Counsel Janine Migden-Ostrander, who represents residential ratepayers on utility matters.

As the Journal noted, when customers are able to choose their electric company, customers can benefit from lower electricity rates.  Currently, the rates offered by many monopoly utilities are higher than the price in the wholesale market and the rates offered by competing electric companies.  That’s because some utilities in states across the Northeast and Mid-Atlantic like Pennsylvania, Maryland, Illinois, and Connecticut buy power in advance, and blend their supplies over two to three years. 

That means a good portion of current utility rates are based on last year’s record high energy prices.  Customers can avoid these higher prices by switching to a new energy supplier, who buys electricity at current, low rates. 

But customers need to take advantage of their ability to choose a new energy provider to realize these savings.  SaveOnEnergy.com is the easiest way to find a low electric rate in Texas, Pennsylvania, or any other of the more than a dozen states offering customers the ability to save money on their electric bill by choosing a new energy provider.  SaveOnEnergy.com puts the power of competition into customers’ hands, with just a few clicks of the mouse.  For business customers looking to save money on electricity, all it takes it just a few minutes on SaveOnEnergy.com to get custom quotes from up to eight competing energy suppliers, so customers can get the lowest electric rate possible.

SaveOnEnergy.com, the fastest and most convenient way to find a low electric or natural gas rate, announced it has named 25-year energy industry veteran David Roylance as its new President and Chief Operating Officer.  Roylance’s expertise will further solidify SaveOnEnergy.com as the authority on North American electric and natural gas competition and online energy comparison shopping.

Roylance will oversee day-to-day operations of the company and will also be responsible for the expansion, development and growth of SaveOnEnergy.com in both the commercial and residential fields in North American markets that allow customers to choose a lower electricity rate or natural gas rate.

“The energy market remains complex and competition is increasing,” said Roylance. “From an individual shopping for better electricity rates to a business executive looking to effectively manage corporate costs, SaveOnEnergy.com is committed to providing transparent, convenient and effective tools that require energy suppliers to aggressively compete for business.  I am thrilled to help grow SaveOnEnergy.com’s presence in deregulated markets across North America.”

Only SaveOnEnergy.com offers business customers its exclusive retail exchange portal, which allows customers to get head-to-head rate quotes from up to eight competing energy providers. 

SaveOnEnergy.com also makes shopping for a residential electric or natural gas rate simple and easy, taking the work and confusion out of finding the best electric or natural gas rate.

“With David’s more than 25 years in energy, half of that with Reliant Energy, we have secured veteran experience to help grow SaveOnEnergy.com,” said Brent Moore, SaveOnEnergy.com’s founder and Chief Executive Officer.

“David’s significant industry experience and customer relationships, particularly with large commercial and industrial users in deregulated markets, will grow our commercial side of the business in North America.  I’m confident his leadership will strengthen our efforts to become the leading online shopping destination for consumers looking to save on energy,” Moore added.

Most recently, Roylance was senior vice president of Houston-based Reliant Energy.  Since 2001, Roylance has led Reliant’s expansion of commercial and industrial sales and marketing outside of its native Texas market, including successful launches in Northeast markets such as Maryland and New York, as well as Illinois.  In 2009, Roylance also added residential sales to his responsibility.  Previously, Roylance served in several other capacities with Reliant, including director of natural gas trading and marketing, and he also helped establish Reliant Europe’s presence in wholesale energy sales and marketing.

Prior to joining Reliant in 1998, Roylance rose through positions of increasing responsibility at ConocoPhillips’ domestic and international operating units, starting as an analyst and, ultimately, rising to director of natural gas trading and sales throughout the Southwest region of the United States.

With this executive hire, SaveOnEnergy.com will open an office in Houston – where Roylance is based.

“Houston is a hub for energy competition,” noted Moore. “David’s presence in Houston will allow us to provide enhanced leadership to a competitively supplied energy marketplace. We couldn’t be happier about this relationship.”

Competition is rapidly decreasing Texas electric prices, as energy providers compete for customers’ business — and it’s not just the monthly variable rates which are seeing pricing declines.  Fixed-price contracts — an innovation not available from traditional regulated utilities — are falling as well, meaning not only can customers get a low rate for their electricity right now, but they can lock it in for 12 months, or even longer, guaranteeing them lower electricity rates for the long haul.

The cheapest electric rates in Texas remain the variable rates, which can vary month-to-month.  These rates are as low as 8.5¢ or 8.9¢ in some parts of Texas, including the Dallas-Ft. Worth area.  These prices are up to 15% lower than the old regulated rates of December 2001, right before the market opened, even when not adjusting for inflation.  Still, critics of customer choice dismiss these low rates since they may increase in the next month.

However, it’s undeniable that fixed-rate energy prices are falling just as fast, giving customers not only a cheap electricity rate, but peace of mind that their rate won’t go up in the next 12 months.  In fact, in just the last two months, fixed-price contracts in the populous Dallas and Houston regions have dropped over 6%, a phenomenal rate considering it’s been only 60 days.  The drops by service area are below:

One-Year Fixed Contracts: May 8, 2009 versus March 9, 2009

Service                            May 8                      March 9                     

Area                                REP Offer                REP Offer                   Difference

Oncor                                9.9¢                      10.6¢                         -6.5%

CenterPoint                      10.6¢                      11.3¢                         -6.2%

TNMP                                 9.9¢                      10.1¢                         -2.0%

AEP TNC                            9.9¢                      10.0¢                         -1.0%

AEP TCC                          10.7¢                      10.9¢                         -1.8%

As seen above, fixed rate contracts are below 10¢ in three regions, including Oncor (Dallas). 

It’s important to remember as well that fixed rates are something unique to the competitive market.  Under the regulated system, rates weren’t fixed, and customers couldn’t set their monthly budget or protect themselves against price spikes.  Monthly surcharges or riders were added to the regulated price, to cover a host of things like fuel costs, purchased power costs, and environmental upgrade and compliance costs, to name a few.  Customers could never be sure what price they would pay when using electricity.  With today’s low fixed price contracts made possible through competition, not only do customers get a low price today, they’re assured of keeping that low rate for the term of their contract, providing them with long-term savings and certainty.

Ongoing fears of worldwide recession continue to depress energy prices, with natural gas, the driver of Texas electric rates, falling to a 13-month low in electronic trading.  Natural gas is hovering around the $6/MMBtu mark, the lowest level since September 2007.  Even a cut in oil production from OPEC could not reverse falling prices, as investors fear the economic slowdown will reduce demand for energy and erode prices.

While customers might wisely be out shopping for a lower electric rate amid the falling energy prices, they might run into a big barrier — some energy suppliers are suspending enrollment of new customers because of credit and financial problems.  That’s right; some electric companies are turning away customers, particularly commercial customers, because serving them on a fixed-price contract would entail higher credit obligations and risk.  It could mean customers end up doing all their homework, researching energy providers and looking for a quote, only to be told they can’t be enrolled.

Texas customers can avoid this frustration, however, by using SaveOnEnergy.com to choose their next energy provider.  SaveOnEnergy.com’s exclusive retail exchange portal takes all the legwork out of getting quotes and researching energy suppliers.  Instead of customers having to guess which suppliers are still accepting new customers, with SaveOnEnergy.com business customers simply enter their information on SaveOnEnergy.com’s website, and the information is instantly transmitted to several electric companies who are competing head-to-head, and want to enroll the customer. 

In the best of times, SaveOnEnergy.com’s exchange portal is a convenient way for businesses to shop for power any time of day or night, quickly and easily.  But with the turmoil in the financial and energy markets, using SaveOnEnergy.com to find the cheapest electric rate for your business is even more important.

First, SaveOnEnergy.com screens all its energy suppliers so only those with the utmost financial strength qualify to compete for your business.  SaveOnEnergy.com also only recommends electric companies with low prices, innovative products, and high levels of customer service.

Second, SaveOnEnergy.com now saves business customers from going on a wild goose chase, by putting business customers in touch with energy providers who want the customer’s business.  Customers using SaveOnEnergy.com’s exchange portal won’t run into the problem of having to navigate today’s confusing and uncertain marketplace, and won’t meet resistance from electric companies not interested in enrolling new customers.  SaveOnEnergy.com streamlines the process of shopping for electricity, and saves business owners the headache of trying to figure out which suppliers are taking on new customers, and which are on a hiatus.  With today’s present buying opportunity due to lower energy prices, SaveOnEnergy.com is a simple, hassle-free way to cash in on the falling prices.

In the old days, it took a long time for Texas businesses to shop for the cheapest electric rate. They had to call dozens of energy suppliers, wait for quotes, and research each company’s viability and service. The process was also confusing, with different types of products and prices. Ultimately, business owners had to make somewhat of a blind choice for something that takes up a big chunk of their budgets.

Fortunately, SaveOnEnergy.com revolutionized the process of buying electricity for business owners with its unique commercial retail exchange portal, which makes shopping for the best electric rate as simple as a click of the mouse. The online clearinghouse puts businesses in charge and allows them to leverage the power of competition to get the cheapest electric rate without having to devote dozens if not hundreds of hours to sifting through offers and researching energy providers . Instead, SaveOnEnergy.com does all the legwork, vets the suppliers, and allows them to compete directly for a commercial customer’s business. Thousands of Texas businesses have saved on their electric bills thanks to SaveOnEnergy.com.

Here’s how it works. Texas business owners just log onto SaveOnEnergy.com and enter their business and usage information, taking just a few seconds. The information is delivered in real-time to several, pre-screened electric companies who then evaluate the information and contact the customer directly. With electric companies competing head-to-head and contacting customers directly, it cuts down on the time it takes to start saving money on electricity.

SaveOnEnergy.com’s retail exchange portal allows business customers to shop on their own terms, anytime day or night. They don’t have to have employees step away from ringing the cash register, helping customers, or answering the phone to call energy suppliers for individual quotes during business hours, then spend time researching each supplier’s reputability and financial stability. Business owners can instead shop at their leisure, even after hours, knowing that the energy providers on SaveOnEnergy.com are screened so only reputable suppliers with cheap electric rates, innovative products, and high levels of customer service will be competing for their business.

SaveOnEnergy.com offers a convenient way for businesses to find the right electric company at the right price. Its retail exchange portal allows business owners to request special product features or customized products, such as electric plans lasting a specific length of time, or products with green energy. Customers can compare a variety of offers, from fixed price plans to variable rate plans, to see what’s the best deal for them.

More and more Texans are shopping around for the cheapest electric rate and are leaving their old legacy energy provider, but a majority of Texas residents still buy electricity from the company that served them before they had a choice, passing up the savings available from competing energy suppliers. For customers still not shopping, SaveOnEnergy.com provides the simplest and easiest way to find the best electric rates out there.

ERCOT, the organization that runs the state’s electric gird, reported that customer switches to different electric companies were up "significantly" in June, an indication that customers reacted to higher June prices and shopped around for better deals. Customer switches reached 80,000 for the month, nearly double the total from May.

With prices now falling, it’s an even better time to shop, and this month’s numbers should exceed even June’s levels.

Additionally, ERCOT reported that 43% of residential customers have switched away from their old legacy provider, known as the Affiliated REP or AREP, as of June 30, 2008. That’s an increase from 39% a year ago. The AREPs are the companies like TXU, Reliant, CPL, WTU and First Choice Power that customers had been on before choice began, although sometimes under different names (like Houston Light & Power).

While the number of customers shopping for a better electric rate than that offered by their AREP is increasing, a majority of Texans are leaving money on the table by sticking with their AREP, even though they now have a choice for cheaper electric rates.

Two of the biggest reasons customers often cite for not switching, even when there are cheaper deals out there, is that shopping is confusing, and that they trust their AREP more than some of the new electric companies.

Fortunately, the online comparison website SaveOnEnergy.com has answered both of these concerns, and makes shopping for the best electric rate simple and pain free, while assuring customers that only high-quality, reputable energy providers are listed.

SaveOnEnergy.com culls through the hundreds of residential offers in the market to pick only the best deals, ranking companies on price, customer service, payment options, and bonus features like airline miles or rebates. SaveOnEnergy.com’s unique portal breaks down the offers into easy to understand comparisons, showing customers the rate as well as additional features of each offer, so customers can make a quick and easy comparison of the best offers.

Customers can also rest easy that the energy provider they choose through SaveOnEnergy.com will be reputable, financially secure, and won’t suddenly leave the market and strand customers. The energy suppliers vetted by SaveOnEnergy.com are every bit as reliable and dependable as the old AREPs, and in some cases, more so, with extended customer service hours and online service options. In fact, one of the old AREPs, First Choice Power, is considering selling its business, which means customers could be transferred to another provider.

In a quickly evolving Texas electric market, being with the AREP doesn’t give customers any additional security, and the electric companies on SaveOnEnergy.com are just as competent and stable and ready to provide dependable service at cheaper rates. With SaveOnEnergy.com vetting every aspect of their recommended energy suppliers, customers no longer have to pass up savings because they’re afraid of leaving their AREP.