Low Natural Gas Prices have kept Commercial Electricity Rates Down in Pennsylvania

With natural gas prices at low levels, more and more energy suppliers are using natural gas as the primary source to generate electricity. The increase percentage of natural gas in electricity generation production in Pennsylvania has caused commercial electricity rates and natural gas prices to be highly correlated; A rise in natural gas prices is sure to be followed by a jump in electricity rates.

Natural gas levels have boomed in recent year thanks in part to fracking, the method of pumping chemicals into the ground to extract the natural gas from shell rock. With storage levels near capacity, businesses in Pennsylvania have enjoyed declining commercial electricity rates for the past 3 years beginning in January 2010 when Pennsylvania Power and Light’s cap rates expired. These low rates have been marked by mild winters causing low demand to put further downward pressure on Pennsylvania’s electricity rates.

The high supply of natural gas does not mean Pennsylvania’s electricity rates will stay at low levels. The energy market remains extremely volatile and can easily jump in a short period of time as seen in 2008 when energy prices tripled. With natural gas levels near capacity and electricity rates near 10 year lows, businesses in Pennsylvania should start considering locking in a fixed electricity rates for the long run. This will protect the company against any unforeseen spikes in the energy market for the duration of the contract. Electricity choice gives business consumers the flexibility to buy power at advantageous times. With natural gas and electricity prices starting to bounce off of their lows in a time right before the winter season, now is the idea time to execute fixed commercial power contracts.