First Person: Is a Third Party Electricity Provider Worth It?

Yahoo Contributor Network

COMMENTARY | According to a recent New York Times article, the wind power energy industry is expected to suffer a major blow at year end, when a tax credit designed to make wind energy competitive expires. Currently, a wind energy companies receive a 2.2 cent tax credit for every kilowatt hour of energy they produce. How will this wind energy tax credit expiration impact the electricity bills paid by energy consumers, like me?

My Perspective

Exactly 24 months ago, I signed up for an independent, third party energy provider to supply the electricity in my house. The premise was simple: deregulation of electricity would lower prices, and consumers will see immediate savings on their electricity bills. This month, before the wind energy tax credit expires, I pulled the plug and switched back to my electrical utility provider. Here is why.

Expiring wind power energy tax credits

Although there is a possibility of renewal of the 2.2 cent/kilowatt hour wind energy tax credit, there is also a larger possibility that this financial cliff may throw many companies involved in the generation and supply of wind energy (including those that make parts such as turbines) to go out of business. In the best case, the cost of electricity derived from wind energy will increase and consumers will see higher energy bills.

No savings in electric bill from third party electricity provider

Cumulatively over the past two years, my electric bill would have been $5 lower had I stuck with my utility to provide me electricity. In fact, for 2012, my third party electric bills in total were $11 higher, which means that much of my savings from switching to a third party provider came in the early months. Yes, the energy I was using was greener, but the promise of saving some greenbacks in the process, which was part of the reason for switching to a third party electricity provider, never materialized. In fact, each time I paid more than what I would have under my utility, I compared the prices on my third party provider's website. Invariably, the price offered to new customers was about 2 cents per kilowatt hour lower than the price I calculated I was charged for the month.

Utility's electricity is also partly renewable sources derived

My third party electricity provider derived 20% of its energy from wind, and the rest from undisclosed sources, but possibly coal, nuclear and natural gas. My utility currently generates 5% of its electricity from wind, another 3% from other renewable sources, and the remaining from traditional sources, including coal, nuclear and natural gas. While I am not thrilled about increasing my carbon foot print, I do believe the utility will follow the state and federal guidelines to make their electricity more green.

So, rather than waiting for a jump in my electricity bill in 2013, I made the call to my utility and signed back up. Perhaps when the economics of producing energy from renewable sources such as wind improve, I would reconsider a third party electricity provider.

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