Lower electric rates offered

National Grid competition

Telegram & Gazette Staff
January 11, 2007

By Bob Kievra

A Connecticut company has started marketing electricity offers to customers of National Grid, offering rates that for a limited time are 7.5 percent lower than the Westboro-based utility.

Stamford, Conn.-based MXenergy, which supplies electricity and natural gas to 500,000 customers as far west as Illinois, late last month started soliciting residential and business electric customers of National Grid by phone and mail, hoping to increase its share of business in Massachusetts. The company is offering a $25 cash rebate to new customers.

MXenergy, which has about 1,000 customers in Massachusetts, all in National Grid’s service territory, said it could potentially enroll upward of 20,000 customers in the current solicitation, which is slated to end Feb. 28.

“We’re getting a lot of calls and traffic to our Web site and we’re adding between 500 and 600 customers a day,” said Jeffrey A. Mayer, president and chief executive officer of the private company, which had $950 million in revenues last year. “People notice that our prices are lower and that we can offer some long-term price protection.”

MXenergy is offering a power supply rate of 10.8 cents per kilowatt hour, a price guaranteed through the end of April. After that, the price shifts to a variable rate, which is currently the same price — 10.8 cents per kilowatt hour. National Grid’s current fixed rate is 11.67 cents per kilowatt hour and 13.72 cents on a variable basis. The utility will reset its fixed prices for the summer season on May 1.

While MXenergy touts its ability to offer price stability, it is not currently marketing any long-term fixed rates in Massachusetts, officials said. The company said its variable rate, however, can stay the same for several months.

MXenergy is predominantly a natural gas supplier, with only 5 percent of its business in the electricity sector. But Mr. Mayer said he hopes to grow that percentage to 15 percent this year as customers become more accustomed to competing electricity offers at a time of volatile commodity swings, he said.

When they are offered, MXenergy customers often opt for a long-term fixed rate plan of up to three years, officials said. Other customers benefit from a variable-rate plan that generates savings in a declining energy market, Mr. Mayer said.

“We don’t promise savings but in the past, most of our customers have benefited monetarily,” he said. Despite the recent drop in oil prices, Mr. Mayer said he expects energy volatility will remain on the table for the foreseeable future.

Utilities have to hedge against possible price spikes, which often means the fixed six-month electricity rate is higher than for someone taking a month-to-month variable rate, Mr. Mayer said.

Competitive suppliers have been slow in entering the Massachusetts market, with only a handful of companies sporadically making offers to residential electric customers. Dominion Retail Inc., part of Dominion Resources Inc., has been the most active in Massachusetts.

About 10 percent, or 260,151, of the state’s residential, commercial and industrial customers currently obtain their electricity from a competitive supplier. Many of those customers belong to the Cape Light Compact, an aggregator that purchases electricity for 170,000 customers on Cape Cod and Martha’s Vineyard.

National Grid spokeswoman Deborah M. Drew said the utility was pleased that another competitive supplier had started working with the company’s customers.

“This now provides residential customers two suppliers and that means yet more choice for power supply options,” she said. “That’s good news.”