An ESCO is an Energy Service Company. These are businesses that Supply your home with Energy. There is a lot of confusion when it comes to understanding the role of an ESCO, which I hope to address in this post. Firstly, your energy bill comes in two parts, Supply and Delivery and by changing your ESCO you can change the amount of your Energy bill – without anything more than a phone call or online form.
People shy away from ESCOs because they think that the guy from the Electric company is going to have to visit and unplug all your gadgets and rewire your home – this isn’t the case (I’m sorry to disappoint the desperate housewives out there..) all that happens is that you get the bill from the same Delivery company, in my case in Brooklyn that is ConEd and the bill is divided into two:
- ConED gets the Delivery portion
- ESCO gets the Supply portion
And no, that doesn’t mean two bills, its just the same – but you can pay less for your Electricity.
This will be my 4th move, I started with: ConEd Delivery ConED Supply. I then met some guys from Green Mountain Energy who were selling this ‘all green energy’ promise which appealed to me, so I was then paying ConED Delivery Green Mountain Energy Supply.
Earlier this year I dropped Green Mountain for 20,000 United Points from EnergyPlus (who I have since heard are in all sorts of class action suits about not paying these miles – so watch out!). Currently my bill is ConEd Deliver EnergyPlus Supply.
I’m really happy about switching to EnergyPlus even if I don’t get the miles from them, since my bill dropped from $103 down to $67 last month when I changed over from Green Mountain.
How an ESCO is out to get you, and how to poke them in the eyeball before they do
Very simply, they hope that people are dumb, and quite often they are correct, or perhaps more accurately people are too busy to catch the errors that they let in.
The marketing tricks for an ESCO are just like Credit Cards (even giving away miles now!) they offer a low introductory rate – the rate is Variable remember that word, it will save you hundreds over the summer.
The variable rate will ‘vary’ based upon the market – what that means is that in month 1-3 you won’t see a rise, then you start getting complacent and they start raising your rate. The rate is calculated from KW/per hour, and tiny fractional changes to your rate, that appear in line with what you are expecting to pay.
Pennies are Large Percentages
Because you are being billed in KWH increments, the little changes in a price are multiplied massively for your overall bill (in my case my bill dropped by about 30% when I swapped).
According to this website The lowest rate currently is a variable rate of $0.069 per KWH – this one is a great example of an ‘you just bought the cheapest one and the price is gonna JUMP’ options for your ESCO – it is only at that rate for the First Month!
In fact the check out the comments that come with these other low introductory rates – they all are telling you they are about to take advantage of you, but you get one month really cheap first!
So lets ignore these variable providers, unless you are cool with switching them out every month (just make sure they don’t have a longer minimum term and/or a cancellation fee if you do. By sticking with Fixed OR at least FIXED for a TERM we will get no nasty surprises when the Electricity Bill comes.
Fixed Rate ESCO
Your salvation comes in the the form of Fixed rates, you know that the amount you are paying per KWH isn’t going to suddenly leap or slowly creep up to a rate that kills your budget. Check out the best offer from these guys:
This company North Energy Partners is offering Fixed rates, they are asking for a 6 month commitment, however when you click through to their website they have some other offers there too, that are better value than shown above.
Firstly you need to check out the Zone you are in:
Brooklyn isn’t listed, so I am in Zone J by default, I check the offers on North Energy Partners for Zone J and get the following:
So is it really worth the hassle? To me yes, because in the summer I will be cranking the AC at night to sleep and my usage will go up massively. As an example, if you are taking your energy from ConEd instead of an ESCO like North Energy Partners your rates would be something like this:
- North Energy Partners 8.6 cents X 500 KWH = $43
- ConEd 10.045 cents X 500 KWH = $55
Remember you are still going to pay your deliver charges, but if you can reduce your Energy Supply charges by 25% using an ESCO you will really notice the difference this Summer. To calculate what you could save do the following:
- Take your current ConEd bill and multiply the KHW by 1.4 (to account for extra summer usage)
- Take that number and multiply it by 8.6 cents to see the rate you would pay with an ESCO and by whatever is on it now, it could even be higher than 10.045; my bill with Green Mountain was way above that.
Don’t forget – if it is fixed for 6 months that means it goes up in 6 months, be ready to watch it then, and shop around again if necessary.
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