The Basics of Pennsylvania Electricity Choice for Business Owners

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.

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Electric Price Comparison

Electric choice options are heating up in some markets as we begin to enter the high energy summer season.  Customers who use websites to perform electric price comparisons will give themselves access to the most options and highest electric rate savings.

In Philadelphia, electricity customers of PECO energy are experiencing electric choice for the first time and a surprising number of residential and business customers are power shopping for lower energy rates.  PECO energy default rates are going to rise in the summer which has prompted people to explore electric rate options quicker than some had expected.  Because PECO default rates change on a quarterly  basis initial savings have not been huge, but people are starting to see that locking in a low electric rate can be beneficial as it protects you from future increases.  The other side of that argument is that default rates can go down causing you to be stuck paying a higher electric rate with another electric supplier.  While this a possibility, historic energy prices have shown that rates tend to go up in the summer.  Unfortunately, it will probably take a large energy spike for some people to start looking into their electricity choice options

In Texas, which has enjoyed a competitive electricity market since 2002, thousands of customers who had not previously power shopped saw their electric rates triple in the summer of 2008 due to rising natural gas prices.  Electric customers who had previously locked in low rates were not effected by the increases.  Today the majority of Texas electricity customers are in some type of electric supply contract.

New Jersey electricity customers are also getting low electric rate offers that can protect them from summer rate increases.  Performing an energy comparison of all the offers will allow electricity customers to get the lowest offers with the best promotional offers.  Promotional offers as high as a $75 gift card are available in New Jersey.

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Duquesne Electric Savings

Customers of the electricity utility company Duquesne Light can save big money on their electric bill by shopping for lower electricity rates.  Duquesne Light, which serves the Pittsburgh and surrounding areas, raised their price to compare rates in January 2011.  The price to compare rate is the electric default rate that the state of Pennsylvania mandates Duquesne charge their customers who have not chosen a competitive supplier.

With Pennsylvania now a fully deregulated electricity state, Duquesne Light is now just the local electricity delivery company.  Residential electricity customers in the Pittsburgh area can save as much as 19% on their electric bills by signing a fixed electric rate with a competitive supplier.  Customers will still receive their monthly bill from Duquesne Light, the only difference will be that instead of paying the high default rate of 8.89 cents per kilowatt hour, they can pay a rate as low as 7.19 cents.

As of January 2011, 21.3% of Duquesne residential customers have switched electric suppliers.  That number is expected to increase as the saving potential for these customers has recently increased.

Check out current competitive electricity rates in the Duquesne Light area:


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PSEG Service

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

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 comes to who supplies their electricity, and some of those choices will result in savings on the electric bills.  Though it should be noted that many electric suppliers are offering rates that are higher than current PECO default rates.

Most electric suppliers offering service in the PECO area offer a single billing option.  In other words, if you choose to switch electric suppliers, you will still only receive one electric bill per month from PECO for the delivery and supply of your electricity.  The alternative would be to receive two bills; one from PECO for the electricity delivery, and one from the new electric supplier for supply service.

The single billing option combined with a lower electric rate than the PECO price to compare rate make switching electric suppliers equivalent to getting a rebate from PECO energy.  For example, if you choose a fixed electric rate of 8.9 cents from an alternative electric supplier, you in effect are getting a PECO rebate of 10% off of the current PECO electric supply rate of 9.92 cents.

Below are “PECO Rebate” offers from electricity suppliers who offer single billing.


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PPL Electricity

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 taking the time to compare electric providers.

Businesses especially have benefited from the competitive electricity market.  Large businesses who spend over $10,000 a month are saving as much as 30 percent in some areas.  Meanwhile, PPL residential customers are saving a more modest 10-18 percent through various electric companies.

While PPL default electric rates are expected to decrease in 2011, current electric rates are well below the 2010 default prices and less than what the 2011 rates are expected to be.

The Pennsylvania competitive electric market has provided a number of product options for electricity consumers, including low variable rates and peace of mind fixed rates.

Right now, the lowest residential electricity offer is $0.08884 per kilowatt hour, a 15% savings off of the default rate.  That rate is being offered by Champion Energy, who recently won an award for Customer Satisfaction in Texas.  Champion offers consolidated billing in the PPL area, which means that their customers still receive their bill from PPL electric.  The only difference is that instead of paying the $0.1044 PPL rate for Generation and Transmission, they will pay $0.0884.  The delivery charges remain the same.

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How do I Lower My Electric Bill

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 (lines and wires) section and the retail supply section.  The delivery section is the portion of the bill, usually between 20-30% of the total charge, that is paid to the utility company for delivering the power through the lines and wires.  These charges are still regulated by the state.

The energy charge, also called supply charge, makes up the majority of the bill and is the section that has been deregulated.  It is here where customers can lower their electric bill by finding an alternative electric company that will supply electric power at a lower price per kilowatt hour than the current default electric rate that the incumbent utility offers.

Most default rates are set for a specific period of time.  You can lower your electric bill by finding out how long the default rate will be at a certain amount per kilowatt hour and then finding an alternative provider who will offer a lower electric rate for that period.  For example, the default rate for customers who are served by the utility PPL in Pennsylvania is $0.10402 per kilowatt hour for the entire year of 2010.  Locking in a fixed rate of $0.09 per kilowatt for any period in 2010 will give the customer a lower electric bill by 13.5% off of the energy supply portion of the bill.  It might be wise to lock in a low electric rate for a period that goes beyond the expiration of the current default rate if you think energy prices are headed up.

States where you can currently lower your electric bill against the utility default rate include Pennsylvania, Connecticut, New Jersey, Maryland and Delaware.  There are also saving available in Texas if you have not shopped the competitive electric market within the past two years.

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Pennsylvania Business Electric Rates

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.  Right now fixed electric rates in PPL can be locked in for up to 36 months at $0.085 cents per kwh.

On Janaury 1, 2011 capped rates will expire for roughly half of the state including customers in the PECO area.  Electric providers have already begun offering commercial and industrial electric customers fixed electric rates that would start in January when the new default rates take place which are expected to be about a 10% increase compared to what those PECO customers are currently paying.

Find Competitive Commercial Electric Rates

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PECO Completes 3rd Auction for 2011 Default Rates

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 customers. The retail price for small and medium C&I came from a wholesale energy price of 7.61 cents/kWh.

Because energy prices fluctuate, PECO is buying the electricity needed to serve customers in 2011 at four different times – reducing the risk to customers of purchasing electricity all at one time when market prices could be high.  PECO will complete the remaining purchases in September 2010. The results of all four purchases will determine the exact price PECO’s customers will pay for electricity beginning Jan. 1, 2011.

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NJ Default Rates will Decrease in 2010, Greater Savings Available for Shoppers

Electric rates will decrease for the second year in a row for New Jersey electric consumers who are on default service (i.e. have not shopped for a competitive supplier).  However, despite the decrease, greater savings are still available for these default service commercial and industrial customers if they decide to shop the competitive market for lower rates.

The default rates will lower after the four major New Jersey Utilities (PSEG, JCPL, ACE, Rockland Electric) completed their auction for basic generation service. 

Even after the default service reduced rates take effect on June 1, business consumers can expect to save anywhere from 10-30%  more off of those rates by contracting out with an alternative supplier.

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