On January 1, 2011 PECO electric customers will come off of decade long price caps and be subject to more recent market rates.  When this happens, customers will have the option to shop the competitive electric market for lower energy prices and multiple product options from 10-20 electric providers that are expected to be active as the calendar turns to 2011.

PECO will offer “Price to Compare” rates, or default rates, for those customers who are slow to shop the market.   These default rates will be determined by a series of auctions that will allow PECO to buy portions of the generation load that they will need to serve their customers at different times so that they are not subject to the electricity wholesale prices at any given time.  PECO is buying energy for their residential customers at four separate times.  Two of those auctions have already taken place with the final two set to occur in June and September of 2010.  After the first two auctions, the combined retail price secured is 9.41 cents per KWh.  PECO customers won’t know their exact price to compare, and how much those rates will be higher than what they are currently paying, until all four auctions have been completed.  At that point PECO residential customers can expect to see competitive electric providers market for their business.

Update:
PECO customers have been reporting great savings on their electricity bills in 2011.

Here are some obvious options for customers to switch to:

Suez Energy Resources is a retail electric provider who is active in Connecticut, Pennsylvania, Delaware, Illinois, Maine, Maryland, Massachusetts, New Jersey, New York, Texas, and Washington DC.  They offer competitive pricing to large commercial and industrial markets in these regions.  Typically they will not price deals that are below 4 million KWh annual usage which usually amounts to a customer spending around $40,000 a month on electricity.  However they do seem to make exceptions for smaller users from time to time.

They offer a variet of products tailored to larger users such as block pricing and heating index rates.  From discussions with large users and brokers, their pricing tends to be competitive.  On the down side, they currently shy away from offering long term contracts.

Falling natural gas prices have resulted in lower competitive electric rates for PPL customers looking to shop.  Rates as low as $0.086 per kilowatt hour can be locked in for small businesses.  This would result in a 16.5% savings versus the small business default rate of $0.10402 per kilowatt hour.

The extremely volatile natural gas market is at its lowest point since 2005.  Ideally businesses should take advantage of this time and sign 24 to 36 month fixed rate contracts with a competitive electric supplier.  Generally people like to get their feet wet before they jump in.  As a result most Pennsylvania electric customers who have switched suppliers have signed short term contracts (12 months or less).  However, with prices as low as they are, it makes sense to lock in for a long term fixed rate.  The chances of these rates getting higher far exceeds them getting lower over the next 24 months.

Basic Generations Service (BGS) rates for PSEG electric customers have been established for the new year.  BGS rates are the default rate for customers serviced by the utility PSEG who have not shopped for a competitive electricity supplier.  The new rates will go into effect on June 1.

PSEG default rates for the supply portion of the bill are divided into a summer term that begins June 1 and extends through the end of September, and the non summer term that begins October 1 and extends through the end of May 2011.  The default BGS rates include the entire Supply section on customer PSEG bills.  This is often an area of confusion to business customers who look into the benefits of competitive rate shopping.  The total price to compare takes into account the generation rate as well as capacity charges.  When customers just compare the per KWh rate on their current bill they are not getting an apples-to-apples comparison.

In order to realize the actual price to compare, PSEG business customers should take their total supply charge and divide it by the total amount of KWh they consumed for the bill period.  This will result in a KWh rate that can be compared to offers from competitive suppliers.  This price to compare will include state taxes of 7%.  So if the competive rate does not include taxes (as will be stated on the contract) multiply the rate by 1.07 to get the true comparison rate.

The bottom line is that there are competitive electricity suppliers available for business customers serviced by PSEG.  Depending on the size of the customer and the type of electricity product chosen (fixed, variable, green energy, long term), savings can be as much as 25%.

Update: We found some great providers offering a variable and fixed rates in the PSEG electric area, see below:

With many electric deregulated markets seeing true market participation by suppliers and users for the first time, consumer questions and concerns are on the rise.  Used to paying electric rates set and monitored by the state, electricity customers are skeptical and uneasy about their introduction to fixed electricity rate contracts.

Consumers hear the word “contract” and they panic.  The are comparing it to their cell phone contracts where they have been burned in the past with hidden charges and lengthy obligations.  However, the comparison of electricity contracts to cell phone contracts is not a fair one.  The invasion of cell phone use lead to a variety of company and product options for consumers that resulted in a better quality of life (though some will argue that).  When a consumer went to purchase his first cell phone, he chose to buy a new product that would provider certain convenience factors in his life.

In many of these new electricity markets (Connecticut, Pennsylvania, Maryland, Delaware) default rates by the state have been set for the year.  Competitive electric suppliers are often able to offer fixed rates for the entire year that are much less than these default rates.  The original utility in these markets continue to bill the customer.  The only downside to entering a fixed contract is that you are committing to using the alternative supplier for the contract term.  However, that “downside” is actually a benefit as it guarantees that your rate will be lower than the default rate for the entire year.

To combat the “contract fear” many electric providers offer a variable monthly rate with no commitment.  People feel good about the fact that there is no commitment, but their service provider is now free to charge them whatever they want.  The fixed contract gives the customer price protection; they will know exactly what their rate will be and exactly how much they are saving versus the default rate.

With PPL Capped rates expiring at the end of 2009, PPL is now only in the business of delivering electricity and not responsible for generating or supplying electricity to businesses and consumers.  PPL is  currently providing electricity supply default service to those customers who have not shopped the competitive market.

Residential customers on the PPL default service are paying a rate of $0.10448 per kilowatt hour while small and medium size businesses in the GS1 and GS3 rate classes have a PPL default rate of $0.10402 per kilowatt hour.  Rates for all of these customer classes can be lowered to the $0.09 range, or possibly better, if customers take some time to shop the competitive energy market.

Responding to consumer fears of entering into a contract, many providers are offering a month to month option with no penalty for changing providers.  Customers should understand that with these type of agreements, the rate is variable and can change to anything at any given time.  On the contrary, fixed rates lock in a rate for a specific period of time.  Though it comes with the downside of a penalty if you leave the provider before the contract is up, you get the upside of securing a lower rate than the default service.  In the PPL electricity market, any fixed rate contract that is lower than the default rate ($0.10402 commercial) is guaranteeing savings for 2010.  The floating month to month rate only guarantees savings in the initial month of service with the new provider.

Join our club to find the lowest rates in your area.