Buying Green Electricity From a “Competitive Supplier”
Are you confused by solicitations from companies offering to supply electricity a price lower than Eversource? And what does it mean when companies offer the opportunity to buy green electricity? Read on!
Proceed with Caution
Before proceeding, please be aware of the need to be cautious about contracting with competitive suppliers, especially those that go door-to-door. In early 2018 Mass. Attorney General Maura Healey released a report finding that many customers who sign up with competitive suppliers, especially low income customers, pay much more for their electricity than if they had stayed with their utility-supplied power. In fact, she has called for an end to the competitive electricity supply market for individual residential customers. (See What to Avoid tips from Eversource.)
Where to Start
If you are interested in investigating suppliers of green energy, your best resource is Energy Switch Massachusetts, the new Mass.gov website that helps consumers make a decision about buying electricity from competitive suppliers. It has a chart which compares prices/kilowatt hour, contract terms, amount of renewable energy offered, and estimated cost per month compared with your current utility, including Eversource. You can sort the list by “Renewable Energy content.”
The non-profit Green Energy Consumers Alliance also has detailed information about buying green energy. Through their Green Powered Program you can keep your present electricity supplier but support New England renewable energy by paying a few cents more per kilowatt hour.
What you should know
There are two parts to your electrical service:
- DELIVERY SERVICE: This includes maintaining the electric grid, delivering power to your home, supporting energy conservation, and other services. For Needham residents this service is always provided by Eversource. The delivery service charge is based on your kilowatt hour usage and appears on your bill as “Delivery Services.”
- SUPPLIER SERVICE: Suppliers buy electricity from power generators and sell it to consumers. Unless you specify otherwise, Eversource is automatically your supplier. Consumers do have the option to choose another supplier. The supply charges are based on kilowatt hour usage and show up on your bill as a “Generation Charge” under Supplier Services. If you keep Eversource as your supplier, no other company will be listed. If you choose another supplier, you will still get just one electric bill and the supplier charge will be labeled “Competitive Power Supply.” Whether or not you choose a competitive supplier, Eversource will continue to deliver power to your home or business, read your meter, care for the poles and wires, provide customer service, and restore power when there is a service interruption. Below is a sample bill where the customer has not chosen a power supplier.
Now for the “Green” part:
Some competitive power suppliers offer “green energy” options. This means that they will buy Renewable Energy Certificates (RECs) to cover the amount of your usage. What are RECs and why are they important? Generators of Renewable Energy have two sources of revenue: 1) selling the electricity they generate, and 2) selling “Renewable Energy Certificates” or RECs. (They can sell one renewable energy certificate for each 1,000 kilowatt hours of electricity generated.) Since Renewable Energy Certificates are an important financial incentive for renewable energy projects, suppliers that buy RECs on your behalf are helping to bring more clean energy into the grid. Be aware that competitive suppliers may not be buying RECs from New England facilities, which depend more on income from RECs than in other parts of the country. See Green Energy Consumers Alliance information about the importance of New England RECs.
What to keep in mind when choosing a Competitive Supplier:
- The prices quoted by competitive power suppliers only replace the supplier portion of your bill. You still have to pay for the charges for delivery service. See the Eversource Competitor Price Calculator to see how your bill would be affected.
- Eversource sets its supply rates for 6 months at a time (January – June; July – December).
Third-party suppliers offer a variety of plans. Make sure you know what you’re getting:
- If offering green electricity, do they explain on their website where they buy the Renewable Energy Certificates? And does the company buy New England RECs for more than 20% of the electricity they sell? (In 2022 Massachusetts suppliers are required to buy New England RECs for at least 20% of the electricity they sell. If a company is not buying more than 20% of those “Class 1” RECs, it’s just following the law, not being green.)
- Is the rate variable or fixed?
- If fixed, for how long?
- How does the rate compare to the current Eversource rate? See the Eversource Competitor Price Calculator
- Are there monthly fees in addition to the rate per kilowatt hour?
- What is the penalty for early termination?
- How are renewals handled? Are they automatic? (Be wary of automatic renewals without your permission or without prior notification.) When renewing, make sure to find out what the new rate is — it may have changed.
- Greening Your Electricity presentation slides 3/2/15
- Greening Your Electricity: Questions to ask when Choosing