LEWISTON — The electricity provider ads sound great.

Fixed rates!

Receive a $50 gift card!

Worry-free guarantee!

They’re designed to entice, as ads do. But in reality, the better deal may be the one Mainers get without signing up with anyone. 

“I have not seen a new contract with a provider that’s been able to compete with the standard offer, that can beat that price,” said Kiera Finucane, a consumer adviser with the Maine Office of the Public Advocate.

Beginning in 2016, the state’s default electricity rates will change each January. As lower standard-offer rates loom, experts say it’s a good time to shop around.

Get your power from a private, competitive electricity provider or go with the state’s standard offer? The best deal may surprise you.

Competitive electricity providers, or CEPs, are companies approved to supply Maine customers with electricity. Central Maine Power and Emera Maine oversee power lines, but CEPs provide the electricity that flows through them.

In recent years, electricity supply has become a booming business in Maine. In 2011, 22 CEPs were licensed to sell to CMP’s residential customers and few were believed to actually be serving anyone. Today, that number has jumped to 80, and customers are showered with TV, radio, Internet and mailed ads from CEPs eager for their business. 

Every CEP touts its low rates or its fixed rates or the thing that makes it unique. But there are downsides, too, including early termination fees, contracts that automatically renew and variable rates that jump without notice.   

Experts say buyers need to beware.

Right now, tens of thousands of residential and small-business customers use CEPs rather than the standard offer, which is the no-contract, no-penalty, yearlong locked-in rate negotiated on their behalf by the state.

And right now, the standard offer is, in most cases, the cheaper one.

The rise and fall of CEPs

State law paved the way for CEPs in 2000 when it restructured the electric utility industry in Maine. No longer could CMP, Emera Maine (then Bangor Hydro) or any other utility both supply and deliver electricity. The goal: Create a competitive market for power and, hopefully, lower electric bills.

Maine’s major electric companies began only delivering power.

Consumers could contract directly with suppliers if they wanted, but state regulators thought that might be a hassle for people. So to make sure everyone had at least one automatic supply of power, the Maine Public Utilities Commission created a “standard offer.” The PUC now regularly accepts bids from suppliers, takes the lowest bid and makes that the default supplier for Maine businesses and consumers.

It didn’t take long for medium and large businesses to start hearing from CEPs. Big businesses tend to use a lot of electricity and a CEP could make more money supplying power to one large company than it could from dozens of residential customers. Businesses found they could shop around and negotiate their own prices.

By May 2011, more than 84 percent of CMP’s large-business customers got their electricity from a CEP rather than taking the standard offer.

Only 0.5 percent of residential customers did.

Then, in 2011, Auburn-based Electricity Maine opened for business. Using social media and traditional advertising, it did what no other supplier had been able to do: educate consumers about their options and give them a price lower than the standard offer.

By 2012, Electricity Maine had signed up 150,000 people throughout the state. Other CEPs were flooding into the residential market.

Today, the Maine PUC lists more than 200 CEPs overall — suppliers or middlemen who helped broker deals between customers and suppliers — licensed to do business in Maine. Eighty are approved to work specifically with CMP residential customers and 76 are approved to work specifically with Emera Maine residential customers.

Although they’re licensed, not every CEP is active. In 2014, the most recent year for which information is available, 10 CEPs reported sales in Maine.

C.N. Brown, a South Paris-based company best-known for its convenience stores and home heating oil delivery, formed a CEP and started supplying electricity. So did FairPoint, a communications company focused on Internet and phone service. Some others were already doing business as electricity suppliers in other states.

CEPs’ popularity peaked in June 2013 with nearly 228,000 customers statewide. Twenty-nine percent of small business and residential customers used a supplier.

Since then, CEP popularity has remained high among medium and large businesses, but it’s waned for others. In October, the latest month for which figures are available, 18.5 percent of small business and residential customers used a CEP, down from that 29 percent high. 

Price likely had a lot to do with it. People started turning away from CEPs around the time the standard offer began to drop, according to Finucane. 

Despite the slide, CEPs still bring in tens of thousands of customers. Nearly 150,000 of the 800,884 electricity customers in Maine use suppliers. The vast majority — just over 130,000 — are CMP’s residential and small-business customers. 

Both the Maine PUC and the Office of the Public Advocate regularly field calls from customers asking about electricity suppliers.

“This time of year it’s information seeking about what the prices are currently, as well as renewal notices. That’s the big thing,” said Finucane, who handles those customer calls for the Public Advocate’s Office.

The PUC and the Public Advocate also post CEP information online. The PUC lists all of the suppliers licensed to operate in Maine, provides information on choosing a supplier and answers frequently asked questions. The Public Advocate maintains a cost comparison calculator, lists recent prices for CEPs that responded to its query and provides information on shopping for electricity on its site.     

But sometimes that isn’t enough.

After the big education push by Electricity Maine and others a few years ago, many Mainers now know they can choose their supplier. They don’t necessarily know what happens after that.

Many don’t realize they’re entering into a binding contract with that supplier, even if it’s only verbal, and there are likely fees for breaking that contract. They don’t realize how long they’ll be under contract or what happens when that agreement is up.

“We reinforce as much as we can, ‘Please read the fine print so you know what you’re signing up for,'” said Harry Lanphear, administrative director for the PUC.

Those people who are still with CEPs also may not realize that the standard offer — which has no contract, has no termination fees and locks in a rate through 2016 — is generally 1 to 3 cents per kilowatt-hour lower than CEPs are offering right now.

For the average residential customer — who uses 550 kilowatt-hours of electricity each month — a 2 cent kilowatt-hour difference equals about $10 a month, or $120 a year. 

“A (promoted) $50 gift card, you know, they would have to have a very attractive rate for that to work,” Lanphear said.

North American Power is the CEP offering a gift card for new 12-month agreements. For Lewiston residents Friday, the company’s lowest 12-month advertised rate was 8.79 cents. 

The standard offer for CMP residential and small-business customers is 6.56 cents between January and March and 6.44 cents for the rest of the year — a $150 savings over North American’s price for the average person.

Can’t compete on price

Electricity prices are affected by a number of things: supply and demand; the cost of oil and natural gas; whether the supplier made an  agreement for electricity when the price was high or low; and whether the supplier has a large enough customer base to negotiate a better price.

The standard offer was high when CEPs started breaking into Maine around 2011. But as electricity prices dropped, bids dropped. It helped that the standard offer serves so many customers — over 650,000 — so bidders could count on an economy of scale that CEPs couldn’t.

Individual suppliers haven’t been able to compete in the current market. So rather than advertising the lowest rate, CEPs have focused on other promotions.

“It’s not limited to just, ‘who can come up with the lowest rate,’ it’s ‘who can create an offer that delivers the most value for customers,'” said Chad Klein, spokesman for North American, which has been advertising throughout the area recently.

North American’s direct mail ads offer a $50 gift card and put an emphasis on fixed rates. Its website promotes a home energy report that helps people manage electricity use. 

“Although our mail offer has only been reaching Maine residents over the last several days, thousands have already responded,” Klein said, adding, “It’s clear that folks are responding very positively to the value we’re offering.”

When it first started, Electricity Maine guaranteed that it would always provide the lowest price. In a Sun Journal story on the company in 2011, co-owner Emile Clavet promised, “We will always beat the standard offer. You’ll never, ever pay more than the standard offer, or we won’t be back.”

The company doesn’t say that anymore.

Electricity Maine, which remains among the most popular suppliers for residential customers, instead emphasizes customer service and the fact that customers will be rolled over into another fixed-rate plan when their plan expires rather than a variable-rate plan that could change every month without notice. It relies heavily on its Auburn roots to set it apart from other CEPs. 

“One of the things that drives customers to Electricity Maine is the fact we’re a local company,” said customer service head Jason Larrabee. “A lot of our customers do want to support the local business.”

But that doesn’t entice everyone. Electricity Maine’s prices on Friday were about 3 cents per kilowatt higher than the 2016 standard offer for CMP customers, a $200-a-year difference for the average Mainer.

The company has started slashing its rates to make them closer to the standard offer for some current customers who have said they’re going elsewhere.

“We don’t want to really lose any customers,” Larrabee said. “We want to try to be faithful and keep those renewing customers that have been with us since, let’s say, day one. Even if we’re buying (electricity) at a higher rate, the company right now is willing to take a little bit of a loss to keep those renewals up.”

Like the PUC and the Public Advocate’s Office, Larrabee believes education is vital when it comes to choosing an electrical supplier. He said his company makes an effort to teach customers and potential customers about CEPs, contracts and their rights.

“It’s still new for a lot of customers. Actually, a lot of the elderly customers still don’t understand. So we do our best to educate them to the best of our ability, without swaying them. We’re not the best for everybody,” Larrabee said.  

The PUC recently created two new important rules for power suppliers. CEPs must now provide a clear renewal notice for customers. And they must send at least two renewal notices 30 to 60 days before the end of a contract.

However, there’s a catch.

“That can be by email or hard copy. Whatever your preferred method of communication with that company is,” said Finucane with the Public Advocate’s Office. “So if you change your email address, you’re responsible for notifying the company of that change.”

Experts say customers should keep track of their contracts rather than rely on their CEP to notify them that it’s ending. And they say customers shouldn’t be afraid to ask their current supplier for a lower rate, as many people do with their cable companies.

They also say customers should shop around, to both CEPs and the standard offer. Although the standard offer is locked in for a year, CEPs’ advertised rates can change daily.

And while the standard offer is the lowest right now, the market could flip again in months or years, making CEPs the better choice, as they were in 2011.

“Realistically, 2017 is a little too far for us to say prices are going to stay low or they’re going to go up,” Finucane said. “There’s just too many variables at this point. I think being an educated consumer is the important part.”

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What you should know

 * Customers are automatically enrolled in the standard offer unless they choose a different supplier.

Percentage of small-business and residential customers who use a CEP

October 2012: 24 percent

October 2013: 28 percent

October 2014: 23.6 percent

October 2015: 18.5 percent

Source: Maine PUC