default rate

On June 1, generation electricity rates will increase by 33.4% for over 100,000 businesses who are serviced by the central Pennsylvania utility company PPL (Pennsylvania Power and Light).  Business customers who have not done their electric shopping and have taken the time to compare electric suppliers will see their generation supply rates increase as the state regulated default rate will increase to 13.028 cents per Kilowatt hour from the current rate of 9.766.

The default electric rate, termed price to compare by the Pennsylvania Utility Commission, was expected to have only increased to just over 11 cents.  However, due to a higher than expected last auction for the default customers, the rate was pushed up.  Authorities at the Pennsylvania Public Utility Commission along with upper management officials at PPL are urging business customers who have not done electric price comparison to get out and find a lower electric rate.

PPL does not profit from the default price to compare rate that is charged to electricity customers who have not chosen an alternative supplier.  Instead that rate is passed through PPL by competitive electric suppliers who have won auctions to supply energy to a percentage of the default rate payers.  Many people who have not participated in electricity choice have decided to do so because they want to remain a PPL customer.  The reality is that they are already buying their electric power from other companies that are not PPL.  PPL simply passes through those revenues to the winning bidders at the auctions.  Furthermore, PPL remains the regulated utility company for all of their customers.  This means that no matter what rate a customers chooses, they will still receive their power by PPL through their transmission and distribution services.

The 33.4% electric bill increase will certainly be a shock to many business customers.  Even with the old 9.766 rate business customers were able to find lower electric rates below 8 cents that resulted in savings greater than 15%.  Electricity savings will be available for commercial customers.  However it is important to carefully review any electricity rate contract that you decide to sign.  Many suppliers have been offering rates that have hidden charges.   If you are comparing electric rate offers in Pennsylvania, ask to see a rate that includes the entire price to compare component, including the GRT tax.  The 13.028 cent default rate includes energy, transmission, capacity components, and the GRT tax.  The only thing that the rate shouldn’t include are the regulated distribution charges.

Competitive PPL rates can save businesses as much as 35% against summer price to compare electric rates.  If ever a time to learn about electricity choice, now is that time for PPL businesses.

Here are some competitive electric rates and the savings compared to the high business PPL default rates:


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Energy choice is becoming more attractive to residential customers of Orange and Rockland Electric in New York.  The New York utility company charges a default supply rate to its customers which changes on a monthly basis.  The default rate has been above 10 cents per KWh six out of the last nine months, causing electricity customers to look into competitive offers.

The Orange and Rockland price to compare average over the last 12 months is 9.858 cents as of March 2011.  From March 2010 to February 2011 this changing average had been above 10 cents.  Currently, a six month fixed competitive offer of 8.5 cents is available which also includes a promotional $75 visa gift card.  The 8.5 cent offer is a 14% savings versus the 12 month default average.  The idea of saving 14 percent on the electric bill is having a positive effect on electricity shopping in New York.

Unlike other deregulated electricity markets where price to compare default rates are fixed for several months, New York Orange & Rockland price to compare rates are variable and change monthly.  This has caused a slow transition for customers to shop and compare electric rates.  However, with recent data showing that electric default rates in New York have been significantly higher than competitive fixed electric market rates, customers are starting to warm up and welcome the idea of electricity choice.

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PSE&G electricity customers in New Jersey paying basic generation service rates, the PSE&G default rate, are paying among the highest electric rates in the country.  The basic generation service rates are supply electricity rates that PSE&G charges customers who have not selected and alternative electric generation supplier.  These default rates are based on a series of auctions that PSEG holds for their customers.  Electricity suppliers compete to provide rates for a percentage of the PSEG default customers.

PSE&G passes the supply rates from the electricity companies who win at the auction directly on to customers.  So even when a customer pays the basic generation service default rate, they are still paying money for their supply service to another electric supplier other than PSE&G.

Lower electric rates can be selected by customers who take the time to shop and find their own electricity supplier.  When the auction for default rates takes place electricity suppliers have to take into account that a certain percentage of customers will leave the basic generation service during the year.  For example, if an electric company wins the right to provide default service for 100,000 customers starting in June, they have to put a premium on the price taking into account that there is a probability that 15% of these customers might sign a contract with an alternative electricity supplier who is offering a lower electric rate.

When electricity suppliers market their service and rates to individual customers, they do not have to include a premium since they are pricing for one entity.  This results in lower rates and savings on the PSE&G electric bill.

Here are some current offers and savings for electricity customers in PSE&G:


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Today PSE&G serves as the electricity delivery company for over two million residential and business energy customers living in New Jersey, including major suburbs of New York City and Philadelphia.  PSEG used to be a full functioning regulated electricity company, taking care of all aspects of electricity, generation, transmission, distribution, and customer service.  Now that New Jersey has enacted energy choice, PSE&G is now only in charge of delivering power, transmission and distribution, to their customers.

While New Jersey customers have a choice of who supplies their electricity they do not have a choice of who delivers the power to their homes and businesses.  Many consumers in the PSE&G service territory are reluctant to shop for lower electric rates because they feel loyal to PSE&G.  This is the wrong way to view electricity deregulation.  Even when a customer chooses an alternative electricity company to provide power, that person still remains a customer of PSE&G as PSE&G continues to act as the electric utility company delivery power to the property.

When a PSE&G customer receives their electric bill they will notice that the bill is divided into two sections; delivery and supply.  The delivery charges are those charged by PSEG to deliver power as well as maintain the lines and wires.  The electricity delivery charges are regulated by the New Jersey Board of Public Utilities.  The supply section of the electric bill is the part that customers have a choice and can compare electricity rates among other companies.  PSEG customers who do shop pay a default electric rate that PSEG is tasked with charging.  PSE&G does not receive a profit from these default supply charges as stipulated in the New Jersey Electricity Choice and Competition Act.

In addition to PSEG’s service of delivering power and providing default supply rates, they also continue to provide customers with their monthly electric bill.  Even after a PSEG customer chooses an alternative electricity company to provide their electric supply service, the customer will continue to receive one electric bill from PSE&G, in most cases.  It is possible that the alternative electric supplier will want to send their own invoice in which case you will receive two bill, one from PSE&G and one from the chosen supplier.  However, in most cases the competitive electricity companies choose to have their charges billed as a separate line on the PSE&G bill.

The competitive electricity company’s rate takes the place of the PSEG default supply rate, and if the chosen rate is lower than the default rate the customer saves money on their electric bill.  Here are some competitive electric rates that are currently lower than PSE&G default rates.


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PECO Rebate

February 4, 2011

PECO energy customers might notice a slight increase on their energy bills this month.   February 2011 will mark the first set of bills that PECO electricity customers receive that include PECO default rates since capped rates were lifted on January 1, 2011. Many PECO customers are still unaware that they have a choice when it […]

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PPL Electricity

August 31, 2010

PPL electricity customers continue to find savings on their electricity bills. Since capped rates expired at the beginning of the year, more and more PPL customers have started to shop for third party electric suppliers to save money against the high PPL default electric rates.  People are discovering that there are significant savings available for […]

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Find Lower JCPL Electric Rates

August 13, 2010

Jersey Central Power and Light (JCPL) electricity customers are seeing some of the lowest electric rates since the utility deregulated back in 2003. The basic generation service, the JCPL default rate, will be $0.110285 per kilowatt hour from October 1, 2010 through May 31, 2011 for small and medium businesses.  From now through the end […]

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How do I Lower My Electric Bill

August 9, 2010

States that have decided to deregulate, or restructure, their electricity utilities are giving their consumers the opportunity to lower their electric bills.  Misunderstanding how to lower the electric bill has been a problem for some of these electric rate payers. As a simple review, the electric bill is divided into two main sections; the delivery […]

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Pennsylvania Business Electric Rates

July 7, 2010

Pennsylvania business electricity customers can lower their electric rates if they have not already done so in most areas.  Small and medium size businesses in the PP&L (Pennsylvania Power & Light) area pay a default rate of $0.10402 per kwh in 2010.  The default rate in 2011 is not expected to be below $0.10 per kwh.  […]

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PECO Completes 3rd Auction for 2011 Default Rates

July 6, 2010

PECO conducted the third of four auctions for power to serve customers starting in January 2011. It was the second in which the company purchased power to serve small and medium commercial and industrial customers. Those two auctions have an average price from PECO of 8.66 cents/kWh for small and 8.63 cents/kWh for medium C&I […]

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