Umair Gaines
New Jersey has a deregulated energy market, which means that residents and business owners can choose their electric company or natural gas provider from a range of options. Customers can shop around for the best price on their energy supplies, although their electric and natural gas distribution utilities will still deliver those supplies and respond to emergencies. There are various pricing options available, including fixed-rate plans, variable-rate plans, and hybrid plans. It is important to compare prices of licensed electric and natural gas third-party suppliers (TPS) and to understand the terms of the agreement or contract with a TPS.
| Characteristics | Values |
|---|---|
| Energy market type in New Jersey | Deregulated |
| Who can shop for electricity in New Jersey | Any electric or gas customer in New Jersey is eligible to shop |
| How to compare prices | Compare prices of licensed electric and natural gas third-party suppliers (TPS) |
| How to find licensed suppliers | Visit the websites of your electric and/or gas distribution company or refer to the list of third-party suppliers licensed by the New Jersey Board of Public Utilities |
| Price to Compare (PTC) | Default energy rate set by your local utility company; used to determine whether you can get lower rates from another provider |
| Fixed-rate plans | Set price per unit for a set period of time; can help save money if energy costs rise but may result in higher costs if they decline |
| Variable-rate plans | Price changes each month based on the wholesale cost of electricity; no early termination fee |
| Hybrid plans | Combination of fixed and variable pricing; fixed price for part of the contract period and variable price for the remainder |
| Prepaid and no-deposit plans | No deposit required to begin service |
| Commercial customers with peak loads of 750 kilowatts or more | Subject to a retail margin of one-half cent per kilowatthour if buying electric supplies from their utility |
| Commercial customers with peak loads of 1,000 kilowatts or more | Subject to hourly pricing |
| Average New Jersey residential electricity rate | 19.64 cents per kWh (as per the latest data from the Energy Information Administration) |
| Average New Jersey commercial electricity rate | 15.65 ¢/kWh |
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What You'll Learn
Understanding the deregulated energy market in New Jersey
New Jersey has a deregulated energy market, meaning residents and business owners can choose their electricity company or natural gas provider from a range of options. This is in contrast to regulated markets, where there is no competition, and consumers pay their local utility company directly for the energy they provide.
Energy deregulation in New Jersey was implemented in the late 1990s, with the aim of creating a competitive environment for energy suppliers. This means that consumers can shop around for the best price for their energy supplies, while their electric and natural gas distribution utilities will still deliver those supplies and respond to emergencies. Purchasing energy from a third-party supplier is purely an economic decision, and does not impact the reliability or safety of the service.
There are several types of energy plans available in New Jersey. Fixed-rate plans offer a set price for energy supplies throughout the contract term, which can help customers save money if energy costs rise, but they may pay more if costs decline. Variable-rate plans allow the customer's price to fluctuate monthly, depending on the wholesale cost of electricity, and customers can switch plans at any time without paying an early termination fee. Hybrid plans combine fixed and variable pricing, and green energy plans source all energy from renewable sources, and are also available in both fixed and variable-rate versions.
When shopping for energy in New Jersey, it is important to only compare prices of licensed third-party suppliers. The New Jersey Board of Public Utilities has created a website, NJ Powerswitch, with helpful information and tips for shopping for energy.
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Comparing prices of licensed third-party suppliers
New Jersey has a deregulated energy market, which means that residents and business owners can choose their electric company or natural gas provider from a range of options. The supply portion of your electric or natural gas bill is separate from the delivery portion, so customers can shop around for the best price on their energy supplies.
If you choose to shop for energy, it is important to only compare the prices of licensed third-party suppliers (TPS). The New Jersey Board of Public Utilities has a website, NJ Power Switch, which provides a list of TPSs licensed to sell within the service areas of each of the state's four electric distribution utilities. You can also visit the websites of your electric and/or gas distribution company for specific information on buying third-party supplies within your service area.
When comparing prices, it is important to understand the different types of pricing options offered by suppliers. Generally, these options fall into three categories: fixed, floating, and hybrid. With a fixed-rate plan, you pay a set price for energy supplies throughout the term of the contract, which usually lasts between six months and three years. If you cancel your contract early, you will likely be charged an early termination fee (ETF). Floating, or variable pricing, allows the customer's price to rise or fall on a monthly basis as it tracks the wholesale cost of electricity or natural gas. The customer's price is generally a percentage of the wholesale cost. The hybrid option is a combination of fixed and floating options, where the customer pays a fixed price for part of the contract period and a floating price for the remainder.
To compare prices, you can use an online marketplace such as Choose Energy, which allows you to search for available electricity plans in your area based on your ZIP code. You can also call several suppliers to compare their offers, but be sure to have your company's recent billing history available so that they can provide an accurate offer.
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Fixed-rate vs. variable-rate plans
New Jersey has a deregulated energy market, which means that residents and business owners can choose their electric company or natural gas provider from a range of options. This has created a competitive energy market, allowing consumers to shop around for the best price for their energy supplies.
Fixed-rate plans
With a fixed-rate plan, you sign a contract with an energy supplier that offers a fixed rate – meaning that the rate will remain constant for the term of the contract. This is usually between six months and three years. Regardless of weather, natural events, or market volatility, your rate will not change. Fixed-rate plans can help customers save money if energy costs rise in the future, but customers may end up paying more under a fixed-price option if energy costs decline.
Variable-rate plans
With a variable-rate plan, you sign a contract with an energy supplier that offers a variable rate – meaning that the rate may change on a monthly basis as it tracks the wholesale cost of electricity. Generally, the customer’s price is a percentage of the wholesale cost, regardless of the direction in which the wholesale price moves. Variable-rate plans offer more flexibility but also present more volatility in pricing, which may impact your monthly bill. You can cancel or switch plans at any time without paying an early termination fee (ETF).
Hybrid plans
This is a combination of the fixed and variable options. In some cases, the customer pays a fixed price for part of the contract period, and a floating price for the remainder of the time. In other cases, a fixed price will apply to some percentage of the customer’s supplies, and a floating price will apply to the rest.
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How to switch suppliers
New Jersey has a deregulated energy market, which means that residents and business owners can choose their electric company or natural gas provider from a range of options.
If you're looking to switch electricity suppliers in New Jersey, here's a step-by-step guide to help you through the process:
Step 1: Understand Your Current Energy Plan
Before switching suppliers, it's essential to understand your current energy plan and usage. Review your most recent energy bill to identify your current rate, usage, and any other charges. Knowing these details will help you make an informed decision when comparing alternative suppliers.
Step 2: Compare Prices and Suppliers
New Jersey's energy deregulation law allows customers to shop around for competitive rates. You can compare prices and suppliers by visiting the NJ Power Switch website, created by the Board of Public Utilities. This website provides helpful information, explanations, and tips for choosing a third-party supplier. Remember to only consider licensed third-party suppliers (TPS) that are authorized by the New Jersey Board of Public Utilities to sell within your electric distribution utility's service area.
When comparing prices, pay attention to the pricing options offered by different suppliers:
- Fixed-rate plans offer a set price for the entire contract term, usually between six months and three years. Fixed rates can protect you from future price increases but may result in higher costs if energy prices decline.
- Variable-rate plans (also known as floating) allow your price to fluctuate monthly based on the wholesale cost of electricity. While you may benefit from low prices during low-demand periods, rates can spike when demand increases. Variable-rate plans typically don't have early termination fees, allowing for more flexibility.
- Hybrid plans combine elements of fixed and variable rates, offering a mix of stability and flexibility.
Step 3: Consider Your Needs and Preferences
When choosing a new supplier, consider your specific needs and preferences. Do you prioritize stability and predictability in your energy rates? Or are you comfortable with variable rates to take advantage of potential savings during low-demand periods? Additionally, review the contract terms and conditions, including any early termination fees or other charges.
Step 4: Make the Switch
Once you've found a suitable supplier with competitive rates and terms, initiate the switch by contacting your chosen supplier. They will guide you through the process of enrolling as a new customer and provide information about any necessary steps or documentation.
By following these steps, you can confidently switch electricity suppliers in New Jersey, potentially saving money and finding a plan that better suits your energy needs.
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How to avoid cancellation penalties
New Jersey has a deregulated energy market, which means that residents and business owners can choose their electric company or natural gas provider from a range of options. The supply portion of your electric or natural gas bill is separate from the delivery portion, so customers can shop around for the best price on their energy supplies.
If you're looking to avoid cancellation penalties, it's important to act quickly as there is a limited window in which you can cancel your electricity contract without facing penalties. In some states, such as Texas, you are protected by a 3-day right of rescission, which means you have three federal business days to cancel without any penalties or fees. After this window, you may face early termination fees if you switch providers.
To avoid these fees, it's crucial to know the details of the fee structure before signing up for a plan. In some cases, the fee is a flat rate, while in others, it's based on the number of months remaining in your contract and can add up quickly if you switch prematurely.
If you're considering cancelling your contract, be sure to contact your provider as soon as possible and provide the necessary information, including a clear request to rescind the contract, your contact details, and your account number.
Additionally, it's important to only compare prices of licensed electric and natural gas third-party suppliers (TPS) when shopping for energy. You can find a list of licensed TPS providers on the New Jersey Board of Public Utilities website.
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Frequently asked questions
Energy deregulation in New Jersey allows residents and business owners to choose their electric company or natural gas provider from a range of options. This means that customers can shop around for the best price on their energy supplies.
It is important to only compare prices of licensed electric and natural gas third-party suppliers (TPS). You can use a marketplace like EnergyBot or Choose Energy to compare prices and plans.
There are fixed-rate plans, variable-rate plans, and hybrid plans. Fixed-rate plans have a set price for the duration of the contract, which usually lasts between six months and three years. Variable-rate plans have a price that changes monthly based on the wholesale cost of electricity. Hybrid plans are a combination of the two.
