Shopping for electricity?

Is North American Power Green?

By TIM FAULKNER/ecoRI.org News staff

Ratepayers are getting a stream of offers to switch from National Grid to another electric supplier. Is it worth it? North American Power’s TV and mail campaign is clearly saying “Yes.” 

The selling point is price. The Norwalk, Conn.-based power producer sent out some 500,000 letters to Rhode Islanders since National Grid announced a 12.1 percent rate hike in December.

North American Power says it saves money by buying electricity at wholesale prices and simply selling it to ratepayers for less than National Grid. The practice of buying electricity from a non-regulated power producer (NPP) like North American Power has been happening since 1998. 

Large power users such as manufacturers and school districts typically shop around for contracts to get the best deal on its electricity by buying from third parties.

Residential customers have the option as well. The East Greenwich company First Point Power has offered this service for several years. North American Power, however, is the first to step out with a huge marketing campaign. Thomas Kogut, chief of information for the Rhode Island Division of Public Utilities and Carriers (PUC), called the scope of the company's mail and TV campaign “unprecedented.”

Kogut said the solicitation from North American Power is much like a credit-card offer with a teaser rate. The rate offered by North American Power or other NPPs is only fixed for a few months before it readjusts. The price can go up or down after the initial term ends based on the contract an NPP gets with a wholesale seller of electricity. The PUC keeps a list of providers where ratepayers can shop for the best price. Not all offer residential service, however, so it requires time and research to shop around.

“You have to be a knowledgeable consumer,” Kogut said.

Based on the current offer from North American Power, residential customers who switch would save $8 a month through June, when the rate ends.

Save green?

The standard program with North American Power offers 25 percent renewable energy; National Grid's standard electricity service contains 8.5 percent renewable energy.

National Grid, however, lets customers buy renewable energy through approved third-party providers. The average residential customer pays about $14 more a month for a 100 percent renewable-energy program through a third-party provider. North American Power offers similar pricing for its 100 percent green-energy plan, which is about $2 less a month than the National Grid program.

One of National Grid's renewable-energy providers, People’s Power & Light (PP&L), is advising customers not to make the switch. Ratepayers can't continue with PP&L's renewable-energy program if they leave National Grid, and PP&L says the renewable energy from North American Power and other NPPs doesn't come from or support local renewable-energy programs.

Priscilla De La Cruz of PP&L said the financial incentive isn't enough to make the switch. “The solicitations might look appealing on paper, but we don't think the savings add up to much — and definitely not enough that they should stop you from supporting local renewable energy.”

Kogut said National Grid likely isn’t losing sleep if ratepayers switch to acquire electricity from another source. “They don’t make money on that," he said. "They make their money on the wires and meter system."

So, if saving money is the main focus, than actively shopping for providers will likely save ratepayers a few dollars, he said. “The answer maybe yes, but you still have to do your homework."