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By The Associated Press
Saturday, Aug. 17, 2013, 12:01 a.m.
 

NEW YORK — Electric bills have long been take-it-or-leave-it affairs: Pay one rate for all the power you used the month before, no matter when you used it.

Some electric companies want to shake up that rigid business model. They are increasingly offering plans that sound like come-ons from mobile phone companies: Free nights, free weekends and prepaid plans.

“We are seeing a transformation in the way people buy and use electricity in the U.S.,” says Steven Murray, president of Direct Energy's residential energy programs.

The more customized plans are made easier by the growing use of digital meters that wirelessly link electric companies and customers, allowing both to track usage in real time. Digital meters have not only spurred competition, they have enabled traditional utilities to reduce their costs by encouraging customers to use electricity during off-peak hours, when it is cheaper.

Forty-two percent of electric customers have digital meters, up from less than 5 percent in 2008. In 2015, more than 50 percent will have them, according to Navigant Consulting.

This new breed of electric plans offers risks.

Customers can end up paying a lot more for power than they expected. Some plans offer low introductory rates that can quickly skyrocket. Others have high early termination fees. Some fixed-rate plans are a great deal if power prices rise, but they may seem awfully expensive if prices fall.

“Some (new plans) will be good for some people, and some will be very, very bad for other people,” cautions Janee Briesemeister, a senior legislative strategist who works on electricity issues for AARP.

This week New York's electricity regulator threatened to block a power provider called Buy Energy Direct from operating in the state over complaints that it signed up customers who never intended to sign up, a scheme called “slamming.”

“It's even more confusing than shopping for a cellphone contract,” Briesemeister says.

Many in the industry think that companies will learn to offer ever more straightforward and useful plans in order to woo and keep customers, and customers will learn to shop for electricity the way they shop for phone or cable service.

“The industry is only at the beginning of learning to understand their customers and figuring out what people want to do,” says Brain Seal of the Electric Power Research Institute, an industry-funded technical group.

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