How to pick your power company

May 20, 2008 4:01:00 PM PDT
Ever since deregulation, you have had the power to choose your electric provider, but are you being given enough information to avoid picking a power company that can't pay its bills?It seems to happen every year: an electric provider goes out of business, leaving customers paying the highest rates around.

This time, it is PreBuy Electric. The Fort Worth area provider could not pay for the power it needed to provide electricity to customers, so the state of Texas sent all 8,500 of PreBuy's customers to the provider of last resort.

Houston-based reliant energy and Gexa are two providers of last resort. The rate PreBuy customers are paying is now 16.1 cents per kilowatt hour. That's among the highest rates currently available and reason for PreBuy's customers to start shopping around now for a better rate.

"Once you are changed over and you determine what the rates and fees are, then you need to decide if that is somewhere you want to stay," Deana Turner of the Houston Better Business Bureau said.

Because it's not uncommon for small electricity providers to go under, customers need to know if the companies they are switching to will have the same problem. So, anyone switching should ask a few questions before signing up.

"Look at a company's track record," Allison Wall, a Gexa representative, said. "Have they been in business very long? Deregulation in Texas is still new, so you are going to have companies who have recently started."

You should also find out who owns the company and search the name on the Internet. Furthermore, consumers really need to know how a provider secures electricity for its customers.

"Ask questions about how they go about supplying their customers," Pat Hammond, a Reliant Energy representative, said. "Are they purchasing that supply in advance?"

If a provider is buying power based on the current cost and not a long term contract, the provider could face financial problems if the cost of natural gas spikes. But, finding out how the supply is purchased is not easy -- even the state does not track that, so it's up to companies to tell prospective customers.

PreBuy customers should start getting bills from their new providers and a letter telling them to look into choosing a lower cost plan.


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