Picking Your Own Energy Supplier May Not Save You Anything

In New York, residents can choose to buy their energy from competing energy supply companies, or ESCOs. The idea is you can end up saving money by choosing from a field of competitors. In reality, says the New York Times, your energy bills frequently increase, and when you try to switch again you might be charged a contract termination fee.

The idea of New York’s “Power Your Way” program was to open up the market to competition, which in theory should drive down prices, but “It remains a crapshoot about whether or not you’re going to save money, pay more money or have it come out a wash,” says Jason K. Babbie, a senior environmental policy analyst for a consumer advocacy group. Another consumer advocate flat out says it’s not worth the trouble:

“You can’t shop your way out of the problem we’re facing,” said Gerald A. Norlander, executive director of the Public Utility Law Project, an advocacy group for energy users based in Albany. “If people want to get their bills down, the best thing to do is conserve. No one has ever shown that resident customers who switched have saved any significant amount of money.”

Mr. Norlander said he was concerned about a trend where ESCO’s come in when prices increase and begin marketing rates to customers that appear to be lower, but in the long run turn out to be higher. Some companies also lock people in to a contract for a year or two with penalties for early termination.

“Buyer Beware in Seeking Lower Energy Costs” [New York Times]
(Photo: Getty)