Retail Power Suppliers Want a Competitive Market for Customers

With plenty of suppliers active in New Jersey, the debate over whether the state should push more customers into shopping for electricity is likely to become more intense in the coming months.

With nearly half a million customer accounts now served by retail suppliers instead of the state's four incumbent electric utilities, the industry is lobbying the Board of Public Utilities to revamp its current system, which critics argue creates an artificial price for electricity, making it difficult, if not impossible, to build a robust competitive market.

It is an issue the state agency is likely to take up soon, once the results of this year's annual electricity auction are known. The online auction, a system in place for more than a decade, began Thursday, but the prices customers will pay for electricity beginning in June should be disclosed by the end of the week.

With natural gas prices still dropping, even advocates of the current system concede it may be time to tinker with aspects of New Jersey's deregulated energy marketplace.

How much so remains to be seen. Still, the current system for how utilities buy electricity for their customers who do not want to bother to shop for themselves came under repeated fire at a NJ Spotlight Roundtable "Cutting Consumer Electric Bills Down to Size" at The College of New Jersey on Friday.

"Quite frankly, for the residential customers, deregulation has failed," said Ev Liebman, associate state director, advocacy, of AARP in New Jersey. "We went from a system of regulated monopolies to deregulated monopolies."

Approximately 5 percent of residential customers have switched suppliers, Liebman noted, leaving the bulk of savings from deregulation to larger industrial and commercial concerns.

Until this past year, there really was not much of an opportunity for residents to switch, but that has changed in recent months with the steep drop in natural gas prices.

More retail electricity suppliers have entered New Jersey -- up to 54 in some utility territories -- undercutting the price utilities charge their customers for power, which is purchased each year in the online auctions.

If the state wants to build a more robust market, especially for residential customers, then it needs to make sure customers pay a price for their electricity that more closely resembles the existing market price," argued Jay Kooper, director of regulatory affairs for Hess Corp. and New Jersey state chairman of the Retail Energy Supply Association.

In Pennsylvania, Kooper noted, the prices consumers pay are based on one- or two-year contracts. "Right now, we're above the market price [in New Jersey]," he said.

In addition, retailers need the state to level the playing field for so-called third-party suppliers. The utilities, which enjoy built-in advantages, make it difficult for retail suppliers to undercut their price. One such advantage: bad customer debts are paid off by a special charge on utility bills.

Continue reading this story in NJ Spotlight.

NJ Spotlight is an online news service providing insight and information on issues critical to New Jersey.