Q&A talks with Michelle Erca, founder of CT Energy Savings.com, about Connecticut’s energy marketplace.
Q: What is CTEnergySavings.com and how is it going to help businesses in Connecticut?
A: CTEnergySavings.com is Connecticut’s new online resource for residents and businesses to compare electric rate plans and switch suppliers with an easy sign up process. CTenergysavings.com can help small and medium-size businesses save money on their electric bill by lowering their rate/kWh as well as providing greener energy options for them. Ultimately, this resource helps all Connecticut electric customers by answering questions about switching suppliers and saves everyone time in researching their options and making the switch.
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Q: Why has the conversion rate been only 25 percent among consumers and business customers in the last five years?
A: Connecticut was deregulated over 10 years ago with the intention of providing customers choice in electric suppliers. However, new electric suppliers were unable to compete with the rates the utilities charged until 2005. Since then, there has been a growing awareness amongst Connecticut electric customers that they can choose a different supplier. In addition, the deregulated environment has become more and more inviting for new energy service providers to offer retail choice in Connecticut at rates well below the utilities.
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Q: Why do the public utilities want customers to switch?
A: CL&P and UI are helping the competitive environment in Connecticut by encouraging customers to switch suppliers since they do not make money on the power they generate for their customers. They are required to pass through the same rate to the customer that they pay to the wholesale supplier. The utilities make their profit by delivering the power to their customers, not generating it. Also, the utilities are still retaining all of the customers they have, they are just providing one less service to those who switch.
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Q: What is the effect of customers switching energy providers on the major public utilities? What is the potential effect on their rates?
A: The major utilities should not be feeling much impact since they do not make money on the generation of power, which is the service that the alternate energy suppliers are providing the customer. Therefore, the switching of customers should not affect the rates the utilities charge. CL&P and UI’s rates are determined by the contracts they make with wholesale suppliers, just like all of the other suppliers, this is due to the restructuring of Connecticut’s energy industry requiring that CL&P and UI sell off their power plants back in the late ‘90’s.
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Q: What is the business model for CTEnergySavings.com? How do you make money from the site?
A: CTEnergySavings.com is an authorized energy broker for several Connecticut electric suppliers. As Connecticut residents and businesses have continued to become more aware that they can switch, we realized there was an opportunity to provide one comprehensive resource that answers questions about switching suppliers and offers a comparison of rate plans along with an easy enrollment form to make the switch. All new enrollments are received by the supplier the same day they are submitted to CTEnergySavings.com. There is no cost to residents and businesses to switch suppliers and the suppliers only pay us for new customers.
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Q: On the website, it says that the public utilities step in if an energy provider goes out of business. How stable has the energy providing business been in Connecticut? Have any gone out of business?
A: In the earlier stages of deregulation in Connecticut, there may have been a few suppliers that didn’t make it but a big part of being successful is timing. At this point, these energy providers have an incredible opportunity. They are joining in the last major deregulated industry at the right time with a huge population of potential customers. Given this opportunity and a solid business plan, they should thrive and be successful for a very long time. Due to the incredible rate that customers are switching, these companies have been able to grow quickly and become profitable in just a few months. In addition, most suppliers operate in multiple states, which have helped them build their customer base even faster. Lastly, their low overhead costs allow them to keep costs down for customers.
