Gulf Oil LP has launched an electricity service in Massachusetts, planning to buy power wholesale and sell it to small businesses and households at rates below those available through major utilities.
The Framingham company, which distributes fuel in the Northeast, began offering Gulf Electricity here on Monday and expects to make it available in New Hampshire, Rhode Island, and New York in coming months, said Rick Dery, a senior vice president for the company.
Gulf Electricity already operates in Connecticut and Maine and hopes to expand into states across the country with deregulated electricity markets, which allow customers to choose their power providers.
In Massachusetts, customers may select their own power suppliers or buy the electricity obtained on their behalf by utilities. In deregulated markets, utilities earn profits from distributing the power, not producing it. They simply buy the power and pass the costs to their customers.
Gulf said it expects to sell power at discounted rates in Massachusetts, but it is still unclear how much homeowners might save. Connecticut residents using Gulf Electricity currently are saving about 15 percent, compared to what they would be paying if they bought power through their utilities, according to Gulf.
Gulf’s expansion into the electricity supply market is part of the company’s larger strategy to diversify beyond the petroleum products it has long supplied, including gasoline, diesel, jet fuel, heating oil, and kerosene. That business has been squeezed in recent years as vehicle mileage standards have increased, consumers have become more energy- efficient, and prices of other fuels, particularly natural gas, have plummeted.
“The business of energy is changing,” Dery said. “There are a lot of pressures on the business of energy — environmental pressures, legislative pressures.”
To stay competitive, Gulf has in recent years installed fueling stations around Massachusetts for E85 ethanol, which is used by flex-fuel cars that can run on gasoline or ethanol. Most recently, the company added E85 stations on the Massachusetts Turnpike.
Gulf also has started using trucks that run on liquefied natural gas and expects to eventually supply and distribute the fuel.
Fred Rozell, retail pricing director at the Oil Price Information Service, which tracks fuel prices and news, said such diversification is smart, given the increasing competition fossil fuels face from alternative energy sources.
“Any business [that] is involved in petroleum needs to be on the lookout and aware of what’s happening with any alternatives fuels, and evaluating if it’s a good move to get involved with or not,” Rozell said.
Gulf hopes to expand its power supply business to all states with deregulated electricity markets. There are more than a dozen in the United States, including all of the New England states except Vermont.
In Massachusetts, Gulf is promoting its electric supply services to residential and small-business customers served by National Grid, NStar, and Western Massachusetts Electric Co.
Last month, about 129,000 residential National Grid customers got their electricity from a competitive supplier. Meanwhile, NStar said it has more than 227,000 customers who use a competitive supplier, as do more than 17,000 Western Mass. Electric customers.
Caroline Pretyman, a spokeswoman for Northeast Utilities, the parent company of NStar and Western Mass. Electric, said that NStar’s basic electricity rates are already hovering at some of the lowest levels since 2004 because of the plunge in the cost of natural gas, which is used in generating electricity. She cautioned consumers to do their homework before changing to another power supplier.
“When customers receive an offer from a competitive power supplier, we always encourage them to read the fine print to make sure they understand the exact terms of the contract,” Pretyman said in an e-mail. “In some cases, there may be restrictions or penalties in the contract for customers who may wish to switch back to basic service down the road.”Erin Ailworth can be reached at firstname.lastname@example.org. Follow her on Twitter @ailworth.