Pennsylvania business customers still with Pennsylvania Power and Light’s default service have experienced large swings in their default rates since the PPL cap rates first expired in 2010. They are not alone as many customers still on Met-Ed’s default rate and PECO’s default rate have also experienced large fluctuations in the price of their electric bill. As higher default rates force many to start shopping for competitive electricity rates it is important to understand the basics of Pennsylvania electricity deregulation and what it means for electricity choice in your area.

The electric bill is split up into two basic charges: distribution charge and supply charge. The distribution charge is a regulated charge and will not be affected by switching to a competitive electricity supplier. The distribution charge deals with the cost of maintaining the lines and wires so the electricity can be transferred from your local distribution company directly to your business. The supply charge is the deregulated charge. If your company decides to stay with PECO, Met-Ed, or PPL you will be set up on a default rate determined by a series of auctions. A company on the default rate can choose to switch to a competitive supplier anytime without being penalized. Due to a number of factors involved including the high volatility of the energy market, a company will be charged a premium if they decide to stay on the default rate.

When you start shopping for competitive electricity rates it is important to make sure the suppliers are including all components of the supply charge. The three basic components of the supply charge are energy, capacity, and transmission. These components can be further dissected to line loss, ancillary, congestion and so forth. Some suppliers will leave out a component of the supply charge to make their rate more attractive. However this charge will then be bypassed onto your electric bill as a separate charge. It is important when shopping for competitive electricity rates to let the supplier know you want an apples to apples comparison to your utilities default rate. Do not let this deter you from taking advantage of the large margin of savings. A typical commercial business in Pennsylvania still on the PECO, PPL, or Met-Ed’s rate will save an average of 15-35% per year by choosing a competitive electricity supplier.

The Commonwealth Edison Company, responsible for delivering power to 3.8 million electricity customers in northern Illinois, recently raised their electricity supply rates for residential customers by 20%. The increase went into effect on October 1, 2012. The new high rate of 8.32 cents includes generation and transmission charges. The 8.32 cents does not include the “Purchase Electricity Adjustment” which is a true-up payment ComEd charges or refunds customers based on the difference between what ComEd paid to acquire power supply for the default customer class and what ComEd actually charged this class of customers. ComEd has estimated that this true-up cost will be another $0.005 from now until May 2013. If this estimated increase is accurate, it means that the true price to compare will be closer to 8.8 cents per KWH for default paying customers in the ComEd territory.

Default paying customers include all electricity customers who receive their electric bill from the Commonwealth Edison Company who have not chosen a competitive electricity supply company to provide them with competitive eletric rates. Customers can eliminate the increase, and even pay less for electricity than the default rate of 6.935 cents that was offered during the summer by participating in the Illinois electric choice market and shopping for electricity rates that are competitive. Switching off of the high ComEd price to compare rate and onto a lower electric rate offered by a competitive electric supplier will also eliminate the “Purchase Electricity Adjustment” charge on the ComEd electric bill.

With competitive rates being as low as they are (see below) the number of power shoppers in Chicago and surrounding areas is growing rapidly. People are starting to understand that electric choice can simply provide a lower ComEd electric bill without sacrificing quality. ComEd is still in charge of delivering power and responding to power emergencies for their 3.8 million customers in northern Illinois. Furthermore, ComEd continues to deliver the monthly electric bill to their customers. Switching electric suppliers simply amounts to the rate on the supply section of the ComEd electric bill to be altered.

Competitive electric companies are able to offer substantial savings versus the Commonwealth Edison default price to compare rate. While many consumers are catching on, there are still many who have not had the time to research the benefits of energy choice. For more information on competitive electric rates in ComEd, see our daily update prices from approved suppliers licensed by the Illinois Commerce Commission.

PECO energy customers who have yet to shop for a competitive electricity rate are about to see their electric bills rise substantially. PAElectricity.org, an energy price information site for Pennsylvania consumers, has reported that a PECO residential rate increase that will go in effect on October 1. The increase will only effect those customers who are still paying the default rate for electricity supply with PECO; which represents all residential customers who have not chosen a competitive energy supplier to provide electricity for their home.

The average household using 1,000 KWh a month will see their PECO electric bill rise by $15.95 a month. That household, using 1,000 KWh a month, who would have paid a rate of $0.08905 per kilowatt hour in September will pay an additional $0.01595 starting in October for a total rate of $0.108 per kilowatt hour. PECO residential customer will pay $0.1050 per KWh for the first 500 KWh they consume, and $0.1114 for all kilowatt hours above that. This means that the more energy you use the higher your rate will be. Most houses use more than 500 KWh of electricity per month.

Fortunately, PECO residential electricity customers can protect themselves against the rate increase and pay even less than what they were paying in September. Several state licensed electricity suppliers (see below) are offering competitive electric rates to PECO energy customers that will offer huge savings versus the PECO default rates.

People who have been slow to shop for competitive rates often have lack of understanding of how the Pennsylvania electricity choice market functions. Here is what you need to know about switching off of the PECO default rate and onto a lower competitive electric rate:

1. The quality of the power will be the same.
2. PECO Energy remains your regulated electricity delivery company.
3. PECO Energy will continue to send you your monthly electric bill.
4. The lower competitive rate will replace the PECO default rate (generation and transmission)
5. PECO will not be upset that you have switched and are now saving money.

The last statement is often confusing to consumers who are new to electricity choice. Through the Pennsylvania energy choice act, PECO Energy remains a regulated utility company who generates revenues from the regulated distribution charges found on your electric bill. Those distribution rates are the same no matter who you choose to supply your electricity (generation and transmission rates)

Here are current competitive electric rates for PECO Energy customers that will save you money against the higher PECO default rates: