Electric rates for New Jersey businesses buying power supplies from their utility will change on June 1, with some components increasing and others decreasing, but customers can still find significant savings by shopping for a competing energy supplier.
Customers in New Jersey who do not shop for electricity are served by their utility on a default product called Basic Generation Service, under which the utility supplies the customer's power as a backstop service. In the case of small and mid-sized businesses, the utility, such as PSE&G or JCP&L, buys power for Basic Generation Service (BGS) over a mandated three-year period -- meaning that the utility must lock-in pricing over this three-year period and cannot take advantage of favorable dips in the wholesale market the way that competing energy suppliers can. This means, even when BGS rates decrease, competing electric suppliers are typically able to offer even greater savings.
Basic Generation Service rates are updated annually every June 1, with a seasonal rate change every October 1.
Although some components of the new Basic Generation Service prices will decrease starting this June, the decrease is blunted due to the blended three-year nature of how BGS supply is bought, and larger savings can be offered by competing third party energy suppliers who can optimize their buying strategies to offer lower prices.
For example, at PSE&G, the energy rate for BGS service for most small and mid-sized businesses (Rate GLP) is tentatively scheduled to decrease about one cent per kilowatt-hour of usage effective June 1; however, the capacity charge for Rate GLP will increase about 60 cents per kilowatt of demand. How this affects an individual customer depends on their load factor (e.g. their ratio of usage to peak capacity) and whether the kilowatt-hour usage decrease is enough to offset to kilowatt demand increase.
However, regardless of the changes to Basic Generation Service rates, customers can save money by choosing an alternative energy supplier. While the energy price component of BGS is projected to decrease June 1, competing suppliers can still undercut this minimal decrease because current prices in the wholesale market are cheaper than the three-year blend of rates that make up the BGS price. This means that New Jersey businesses can save even more than they would by just staying with their utility, perhaps up to 20% depending on the business.
Use deregulation to your advantage to find the lowest energy rate by forcing energy suppliers to compete head to head for your business, thereby driving your price to the lowest level possible and maximizing your savings. Rather than relying on marginal savings through the static BGS rate, businesses can find significant savings by shopping for a competing energy supplier, and receiving a custom electric rate tailored to their individual needs.