PECO rate caps expire, residents should look at options

Jul 03, 2010

By: The Times Herald

By CARL ROTENBERG

Times Herald Staff

NORRISTOWN – It’s déjà vu all over again.

With the end of electric rate caps in the Peco Energy territory on Dec. 31, electric rates are expected to go up about 10 percent for the average residential user. Customers will be able to shop around for an alternative electric supplier, just as they did 12 years ago when electric choice was first introduced in Pennsylvania.

The 1996 Pennsylvania Electricity Generation and Customer Choice Act restructured the electric market to allow competition for most utilities and capped the electric rates at 1995 levels for the incumbent utility through 2009 and 2010.

More than 100 electric suppliers are engaged in a mad scramble to secure large industrial and commercial customers as the Dec. 31 switchover approaches. That is not true for the residential customer.

The Pennsylvania Public Utility Commission’s website (www.PAPowerSwitch.com) will help residential customers shop for cheaper juice by giving them a mild electric jolt six months before the big switchover.

“‘It’s déjà vu all over again,’ to quote the late Yogi Berra,” said John Kaufman, a founding principal of Energy Purchasing Experts (EPEX) “I was in a similar presentation in 1998 when electric competition came to Pennsylvania.”

Major electric providers, power brokers and aggregators are fiercely vying for the large, long-term contracts of power-hungry electric users in Pennsylvania, but residential customers will have to fend for themselves with the PUC choice website and a more limited list of electric providers.

At www.PAPowerSwitch.com, a Norristown residential consumer can compare Peco Energy’s 6.8 cents per kWh and $34 “price to compare” for 500 kilowatt hours to the offerings of only two electric competitors. Unfortunately, Commerce Energy Inc. of Costa Mesa, Calif., is offering a variable price plan quoted at 11.05 cents per kWh and $55.25 per month while Energy Cooperative Association of Pennsylvania in Philadelphia would charge 16.2 cents per kWh and $81 per month.

The Energy Cooperative offering is a 100-percent-renewable-energy product called ‘EcoChoice 100.’

“At this point I don’t know if individual people should be shopping,” said PUC Press Secretary Jennifer Kocher. “They should be learning about the purchasing process and their electric usage.”

Kocher said that because Peco had not made its fourth, and final, bulk electric purchase, the Peco “price to compare” had not been finalized yet. That purchase is expected in November.

“The competitive suppliers won’t enter the retail market until Peco’s price-to-compare is set,” Kocher said. “We may see some offers before that.”

Peco’s electric price hike is expected to be 10 percent, including 3 to 4 percent for generation costs and 6 to 7 percent for distribution costs, said Kocher.

In the first week after PPL Corp. of Allentown raised its rates 30 percent, 223,267 residential customers (16 percent) switched to another electric supplier. Currently, 449,708 customers (32 percent) are using an alternative supplier. PPL serves 1.4 million customers. There are 12 offers from alternative suppliers in the PPL territory, including one that offered 10 percent off PPL’s price-to-compare.

“People really can save money by shopping,” Kocher said. “The average customer in Pennsylvania uses 10,500 kilowatt hours a year. Even a penny difference can mean more than $100 a year in savings.”

Price and contract terms seem to be the focus of small commercial shoppers for electricity.

“Cost is a big one for us,” said Sara Stern, the office manager of Fine Grinding Corp. of Conshohocken. “We spend about $18,000 a month on electricity.”

The family-owned, particle size-reduction company grinds bulk industrial chemicals.

“Right now our bills are high. With the caps coming off, there is potential for it to go higher,” Stern said. “We did inquire about Peco contracts (but) they offer a contract for only a year.”

Paul Williams, the Marlborough Township manager, attended a mid-June Peco customer seminar on electric procurement.

“We spend about $700 a month on electric lights. We’re a small user because we are the most rural township in Montgomery County,” Williams said. “In the summer it exceeds $1,000 a month.”

Rita Jobs, the general manager of the Green Hill Condominium Association, is shopping for a new electric supplier right now.

Jobs wants both a lower price and a long-term price guarantee.

“I really want both,” Jobs said. “I have a responsibility to get the best available price and quality.”

The 546-unit condo complex spends about $600,000 a year and currently has a Peco contract at 8 cents a kilowatt hour.

Some energy experts agree that electric prices are lower because a worldwide recession has tamped down demand for energy of all kinds.

The U.S. is experiencing “historic lows in energy prices now. Natural gas can be used as a proxy for electric prices,” said Chris Cracraft, the energy market sales director at Co-Exprise.

“Right now is a great time to shop because we are at historic lows in electricity over the past five to seven years,” said Kaufman, the founding principal of EPEX.

Back in April 2001, there were 509,000 Peco customers who had purchased electricity from an alternative supplier,

Said Cathy Engel, a Peco spokesperson.

As of June 4, there are 21,000 customers purchasing electric power from another provider, Engel said.

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