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Power companies dangle free night and weekends

Older single-rate plans are beginning to give way to newer custom plans for nation's utilities.
By JONATHAN FAHEY Published: August 17, 2013
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— 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.

But 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.,” said 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 also 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 U.S. 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 comes with 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.

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