Monday, August 7, 2017

Maryland Residential Electricity: What and Why a 3rd Party Energy Contract.

Homeowner and Handyman Tips from EFynch. 

Baltimore, MD:  The other day I heard from a homeowner who was approached by a door-to-door salesman "selling electricity". Although this sounds odd and I do not necessarily agree with the tactic, it is indeed possible and legitimate (or possibly legitimate).

Maryland Energy is confusing at first but simple to explain.
 

Here is the short version (I am using a Baltimore home as the example).

- BGE is your Distributor. They own and maintain the power lines, and handle the payments (sending you a bill, setting up service, etc.). They do not generate any electricity and are a regulated utility. You receive a bill from BGE then BGE distributes those funds to the various entities involved with getting the electricity to your home. Besides maintaining the power lines, they are like the bookkeeper. 

- The Supplier of electricity is NOT BGE- The supplier is also known as the Generator. Historically the Generator had been "Constellation Energy" (now Exelon). They actually own the power plant and are a separate legal entity than BGE. Today, you can choose your own supplier which can save money or allow you to obtain energy directly from a renewable energy power plant.

How Does this work?

Think of the energy grid as a big water tank with several pipes running up and your water supply pipe coming down. The water in the tank represents the electricity that everyone in your community uses. It does not matter where the water comes from, as long as there is water.

Almost anyone can install a generator if they meet certain guidelines. That means there can be several generators (or water sources) putting energy onto the grid (or water into the "water tank").

The amount of electricity put into the grid by each Generator is recorded and credited to that Generator's account. Our local grid is called "PJM" and spans from here as far west as Illinois. PJM is a neutral party that organizes the entire process and keeps records.
The PJM Operator then takes that information and works with your local distributor to make sure that the energy you use is paid for then gets reimbursed to the supplier/ generator.


What about the salesman or other 3rd parties?

When someone claims they can "sell" you electricity, they are a 3rd party supplier. We are all familiar with names like Constellation Energy (now Exelon), BGE, and Pepco from our bills but in 1999 Maryland De-Regulated electricity which allows for new entities to generate electricity (this also happened as renewable energy took off so it fueled growth).

Because of De-Regulation, competition was allowed to enter the market and now you can actually direct BGE to purchase your electricity from a specific source. The salesman likely has a "source" and is selling you electricity, which will change who BGE pays. The registration process is simpler than the actual explanation- when you switch it takes a few clicks of a button.

Why choose a 3rd party Supplier? 
It is 100% up to you and I am no longer involved in this industry (*this is not an advertisement in any way).

You can choose a 3rd party supplier for many reasons but the most common is to save money- which I recommend!

A 3rd party supplier can typically use their own credit strength or a promise to purchase a large amount of energy from a power plant to get a " discount". They sell that electricity to you and share the savings. 

You can also choose to obtain a renewable energy source like I do. When I purchased energy through whomever BGE set me up with in setting up my account. I found a 3rd party renewable energy supplier that with a 1-year contract, I was able to obtain electricity for 20% below my previous rate. There are different types of renewable energy purchases which include directly from a nearby solar/ wind field or to purchase a "bundle" which is energy produced locally but offset by a wind park somewhere else in the country or even world (another article I should write).

Closing:

Research and review your energy supplier. I am not going to recommend anyone but you can either contact the Maryland Energy Administration or simply google "Maryland energy supplier platform". You should be able to enter you basic information then search and find a contract that meets your desires. Most people save bid on their energy expenses after doing this and when I was in solar I recommended this to ALL of my customers.  

*Disclaimer- EFynch is not a home improvement community but is a platform for home improvement services and advice. All work is completed by a 3rd party and EFynch makes no representations to the work being performed beyond what is discussed in our terms and conditions.  The views expressed above are not that of EFynch but are of the Author: Teris Pantazes. Teris was in the solar energy industry prior to joining EFynch but is no longer involved. The views are his opinions only. Any actions your take shall not be done so based on this information as it is deemed reliable but must be verified by your own research. This information is for discussion purpose ONLY.