Utility Offers Electricity on EBay

The high price of energy is driving bids higher yet in a Connecticut electricity supplier's unusual eBay auction.

MXEnergy, one of several electricity suppliers in the state's deregulated market, is offering homeowners and small businesses electricity rates that are locked in, similar to power purchases by large commercial and industrial customers.

To promote its business among United Illuminating's 320,000 customers, the Stamford-based MXEnergy is auctioning off 1 megawatt of electricity to the highest bidder before Dec. 13. As of Friday afternoon, the highest of 18 bid's was $132.50.

MXenergy will accept the highest bid on a megawatt, or 1,000 kilowatts, of electricity and divide it by 1,000 to determine the rate at which the winner can purchase up to 10 megawatts in a year after signing up with MXenergy.

That's about how much electricity an average household uses annually, said Jeffrey Mayer, president and chief executive of MXEnergy.

Divided by 1,000, the high bid of $132.50 as of Friday was 13.25 cents per kilowatt, higher than United Illuminating's rate of 12.35 cents as of Jan 1. The rate will drop to 12.31 on July 1, 2008, said Al Carbone, a spokesman for the utility.

Mayer said MXenergy customers will benefit over the long run despite the higher rate. The privately held MXenergy was founded nine years ago to offer customers locked-in rates that typically are available only to large consumers such as manufacturing plants, he said.

MXenergy serves 500,000 gas and electricity customers in the Northeast, Midwest, several southern states and the Canadian provinces of Ontario and British Columbia.

Mayer compared shifting electricity rates to adjustable-rate mortgages. Just as adjustable-rate mortgages have risen as credit markets are squeezed, the price of electricity has skyrocketed due to tight supplies, high demand, Mideast wars and hurricanes in the Gulf of Mexico, Mayer said.

"Customers and businesses have had no way to protect themselves," he said.

Beryl Lyons, a spokeswoman for the state Department of Utility Control, said Connecticut's two utilities, Connecticut Light & Power and United Illuminating, do not lock in rates because they buy short-term power contracts to take advantage of fluctuating prices.

MXenergy's move follows by several weeks the announcement by Direct Energy that it is entering the Connecticut market to compete for small commercial and residential business.

The Houston-based company, which has offices in Stamford and Wallingford, serves business customers in the state.

The Connecticut General Assembly last year revised the state's 10-year-old energy deregulation law following a public outcry over sharply rising electricity rates.

The new law calls for Connecticut Light & Power and United Illuminating to bill customers and collect money for suppliers, which pay a fee for the collection service.

Lyons said the eBay auction is an unusual use of the Internet.

"It's novel, but I'm not surprised," she said. "For those who are a lot younger than I am, that's the way they do things."

State utility regulators do not impose rules on how energy suppliers promote their business.

"How they market it is up to them," Lyons said.