pa electricity

In discussing the best time to lock in fixed business electricity rate contracts, there is a wide misconception that fixed electricity rates go down during the fall and spring season of the year. While recent historical data may lead one to believe this may be the case, following this to an end in itself is a fallacy and can cost businesses money as they sit around and wait for prices to potentially fall.

Fixed electricity pricing is based on future forward contracts. With natural gas being a significant source of electricity generation in Pennsylvania, fixed rates are highly correlated with natural gas future contracts. This means that when you look to lock in a two year fixed electricity price, the forward natural gas prices for the next 24 months have an effect on the final fixed price for power. Every month included in the duration of the contract will have a set rate the moment the contract is signed. The final fixed price will be the weighted average of the estimated amount of electricity a business is expected to use for a given month times the rate. This means if a Pennsylvania business customer decides to lock in a fixed commercial electricity rate in the middle of summer the price will take into account the cooler months that come along with the fall and spring seasons.

Locking in a fixed rate will protect Pennsylvania business customers from the volatility associated with the energy market. The fixed rate will put a ceiling on the price if the market were to rise during the term of the contract. If the market were to drop you are not necessarily stuck with having to pay a higher rate. More and more electricity suppliers are offering the blend and extend option in Pennsylvania. This allows a business electricity customer on a fixed rate product to immediately lower their rate at any point during the term of the contract in return of extending out the contract. Exercising this option will maximize the savings for the initial term of the agreement while extending out protection against the risk of a potential rise in future energy prices.

Fixed rates are the most common rate structure for those looking to get off PPL, Met-Ed, or PECO’s high default rates. One appealing feature of fixed rates is the transparency in allowing a company to forecast their annual electricity expenditures. Those businesses still on the utility default rate will have to deal with large swings in costs when the electric bill comes due. Budget certainty is a great asset to have when dealing with a volatile market. With the blend and extend option in place, Pennsylvania business customers looking to sign a fixed rate may want to consider locking in a term for several years.

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Electricity choice in Pennsylvania allows for alternative power companies to solicit customers who previously did not have choices when it came to who do buy their power from. The program seems to be working as more power companies continue to offer service in the state, resulting in lower electricity prices for energy shoppers.

Electricity customers can compare several rate offers at electricity comparison sites designed to help consumers compare electricity rates, as well as learn about energy choice and current default price structures.

Energy consumers who do not select an alternative supplier pay a default rate with their local utility company (PECO, PPL, Duquesne). The default rates – price to compare – are based on a series of auctions that have previously been held. Choosing a lower priced supplier simply means a lower monthly electric bill, from the same local utility company. Energy choice seems to be working as prices continue to fall, companies expand, and customers adopt to their new choice by shopping. It is becoming more difficult for incentivized politicians to argue against the Compete Coalition, an organization who supports nation wide energy choice programs.

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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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In Central Pennsylvania, electricity customers of PPL are finding that they can lower their monthly electric bill by comparing electricity companies and finding a competitive electric rate.

The price to compare rate for PPL residential customers, also known as the default supply rate, is $0.10448 per kilowatt hour.  The lowest fixed electric rate that we have been able to find for customers in the PPL area is $0.0889 per kilowatt hour, an easy way to save 15% off of the electricity bill.  To lock in these savings go to Champion Energy.  The plan locks in the low rate for 12 months.

A month-to-month variable rate with 11% savings versus the PPL price to compare rate is available with Verde Energy, also known as Low Cost Power.  They also have a $50 cash back bonus program when you sign up with them.

The price to compare rate is expected to be lower in 2011, but it is unlikely it will go well below 10 cents, if at all.  Competitive electric rate offers allow residential customers to lock in low fixed rates for up to two years, allowing protection from rates increasing drastically.

The electricity wholesale market is highly correlated with the natural gas market.  In recent years the natural gas market has been extremely volatile.  In Texas, where electricity has been deregulated since 2002, customers saw all time high electric rate prices in the summer of 2008 followed by some of the lowest rates just one year later in the summer of 2009.

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Philadelphia Commercial Electric Rates in 2011

August 16, 2010

Philadelphia electricity users are customers of PECO energy, who provides electric supply service as well as electric delivery service for businesses and households in the city.  While PECO energy will remain the electric delivery company for these electric users, many customers will change their electric supply company in 2011 when PECO’s capped rates expire. Starting […]

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PPL Electric Providers

May 21, 2010

The purpose of this article is to briefly explain the different type of electric providers in the Pennsylvania PPL electric market. With the competitive electric market in the PPL utility territory maturing, business and residential customers are starting to become more familiar with some of the 30+ alternative suppliers’ brand names. With many consumers the […]

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Lower My PECO Bill

May 10, 2010

PECO is trying to prepare their customers for choice in who charges them their electric rates by unleashing multiple programs.  Recently, the PA Public Utilities Commission announced that Pennsylvania utility companies will offer customers a choice of who they buy their electricity from.  In addition, price caps that expired in 2011 in the PECO area […]

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PA Electric Rate Choice Offers Savings

April 21, 2010

Question and Answers for Electricity Choice in Pennsylvania Why should I shop the market? Savings are available.  If you haven’t shopped you are paying what the state calls a price-to-compare rate.  Your local utility (PPL, PECO, Met-Ed, Allegheny, ect.) does not profit off of price to compare rates.  They simply pass on these default rates […]

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PPL customers Paying Highest Electric Rates

April 21, 2010

Customers in the PPL territory who have not signed an agreement to be serviced by an alternative electric supplier are paying the highest electricity rates in the region.  Since price caps expired on January 1, 2010 a large amount of residential and surprisingly commercial customers remain on PPL default service, in some cases paying 20% […]

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PPL Pricing Update

March 15, 2010

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 […]

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