Should you switch electric companies?

Many electric customers in Southern Ohio are receiving letters in the mail these days promising lower electric bills if they switch carriers.

(Note: If you looking for information on switching natural gas companies, click here for my latest report on that topic.)

These letters will come from either Dominion Energy, First Energy, or now Duke Energy Retail.  Are they worth considering?

1. Dominion Electric Offer

Ohio Duke Energy customers have been hearing from Dominion Retail energy, offering lower rates if you switch. With so many recent electric rate hikes, this is very tempting.

Its new letter promises 30 percent savings on your electric rates.

Here's where they get that figure:

• Dominion is offering 6.55 cents per kWh as of Spring 2010
• Duke charges 9 cents per kWh

That looks like substantial savings. But should you have any concerns?

We Check the Fine Print

So we checked with Duke and the Ohio PUCO, which oversees electric companies in the state.

We learned you will save money compared with current Duke rates, but not as much as you might think. Here's why:

• Dominion promises a 30 percent discount over current Duke rates.
• But the discount is only on the supply half of your bill.
• The other half of the bill -- Duke's delivery fee-- is unchanged.
• Taxes and state fees are also unchanged.

So the discount might be 10 to 12 percent on your electric. Most importantly, this has no effect on your Natural Gas bill, which is often the larger portion of the bill.

2. First Energy Offer

First Energy of Cleveland Ohio is making a similar offer to Dominion.  However, the company is going further by offering a guaranteed 50 percent discount on your first month, and at least 10 percent off each subsequent month during your two year contract.

These discounts are based on Duke's standard customer rate.

However, it comes with the same downside as the Dominion offer:

• The discount is only on the supply half of your bill.
• The other half of the bill -- Duke's delivery fee-- is unchanged.
• Taxes and state fees are also unchanged.

So again, the discount might be smaller than you expect.  And it has no effect on your Natural Gas bill, which is often the larger portion of the bill.

3. Duke Energy Retail Offer

Some southwest Ohio homeowners are receiving a letter from "Duke Energy Retail" and wondering what it is all about.

It's Duke's way of competing with Dominion with First Energy and Dominion.  Duke has been losing thousands of customers to them, and wants to level the playing field, by offering similar "lock in" rates.

Under the Duke Retail plan, you can:

• Lock in to an 15 percent discount through December 2011, or
• Sign up for a locked in fixed price of .0639 per kilowat hour.
• If you are with a Township or Village that has a special agreement, you will get a bigger discount of 18 to 20 percent.

Either plan offers good savings right now, and it is hard to say which option will be better in the long run. If electric rates fall, the 18 percent discount would probably be the better deal, as your rates will drop further.

But Again, the same downside apply to the Duke Retail Plan:

• The discount is only on the supply half of your bill.
• The other half of the bill -- Duke's delivery fee-- is unchanged.
• Taxes and state fees are also unchanged

So the discount might be 10 to 12 percent on your electric, and will have no effect on your Natural Gas bill, which is often the larger portion of the bill.

The Bottom Line and one Warning

The bottom line is that any of these three offers will save you money right now, and are worth considering if you live in Southern Ohio.

But a warning: do not sign up for an offer, especially the newest from Duke Retail, if you already signed a contract with Dominion or First Energy in the past year.  You can be hit with an early termination fee of $100 or more, for breaking your contract.

As always don't waste your money.  I'm John Matarese.

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