Smoke and Mirrors
August 3, 2011
The debt ceiling was finally raised this week.
The US will not default.
But how come I do not feel any better?
I kept listening to both sides…
Looking for that golden nugget
Will someone finally look at the whole picture
And come up with a meaningful plan?
Republicans want to cut cost
Are they really cutting cost?
All they are doing is cutting the amount of future increases
Not real cost
The democrats want to cut cost (future increases)
And raise taxes
Let’s make everyone pay their fair share
The bottom line there will be $1T dollars in cost reduction
in the
Next 10 years
Congress will form a special committee to recommend
$1.5T dollars of additional cost reductions
To be implemented over the next 10 years
All the while
The US deficit is
projected to grow an
Additional $8 Trillion dollars
From $14.3 trillion dollars to $22.3 trillion dollars
Is this really cutting cost?
What steps are being taken to help…
Grow the economy….
Create jobs….
Restore confidence……
In America’s future?
We are currently borrowing 43 cents of every dollar we spend
At the current pace…
How long will this be
Sustainable?
The US cannot borrow its’ way out of this dilemna
We must devise a plan for the future
One that will rebuild our economy
Help put people to work
Promote stability
And insure prosperity for America’s future
Our forefathers had their disagreements…
But their goal was always for
The common good of the nation
They undertook projects
That they knew would not benefit them
But would provide for the future
What steps are we taking to insure a better future?
For our children and our grandchildren?
Have we allowed our political leaders to become
Complaisant
Debt Ceiling Deal That Cuts Trillions, Creates ‘Super Congress’ Announced By Party Leaders
August 1, 2011
As reported by HuffingtonPost by Sam Stein and Elise Foley
WASHINGTON — Congressional leaders and President Obama on Sunday night announced they’ve cut a deal to avert a historic U.S. default, saying they have assembled a framework that cuts some spending immediately and uses a “super Congress” to slash more in the future.
The deal calls for a first round of cuts that would total $917 billion over 10 years and allows the president to hike the debt cap — now at $14.3 trillion — by $900 billion, according to a presentation that House Speaker John Boehner (R-Ohio) made to his members. Democrats reported those first cuts at a figure closer to $1 trillion. It was unclear Sunday night why those two estimates varied.
The federal government could begin to default on its obligations on Aug. 2 if the measure is not passed.
The next round of $1.5 trillion in cuts would be decided by a committee of 12 lawmakers evenly divided between the two parties and two chambers. This so-called super Congress would have to present its cuts by Thanksgiving, and the rest of Congress could not amend or filibuster the recommendations.
But if the super Congress somehow failed to enact savings, the measure requires automatic cuts worth at least $1.2 trillion. Those cuts would be split equally between military and domestic programs. Social Security, Medicaid and programs for the poor would be spared, but Medicare providers — not beneficiaries — would take a hit.
White House officials confirmed that there would not be an extension of unemployment benefits as part of the final package. The administration had insisted that an extension be part of the grand bargain it was negotiating with Boehner. But when those discussions fell apart, so too did efforts to ensure that unemployment insurance was part of a final package. A senior administration aide added that the president would push for an extension in the months, if not weeks, ahead.
Some observers scored one victory for the president — the second round of cuts do not kick in until 2013, when the Bush-era tax cuts are set to expire. Having a fresh round of deficit reduction that is all cuts with no revenues could give the White House ammunition to end the tax cuts on wealthier Americans, as it failed to do last winter.
“Is this the deal I would have preferred? No,” Obama said. “I believe that we could have made the tough choices required — on entitlement reform and tax reform — right now, rather than through a special congressional committee process.”
The two Senate party heads also expressed qualified support for the deal.
“Leaders from both parties have come together for the sake of our economy to reach a historic, bipartisan compromise that ends this dangerous standoff,” Majority Leader Harry Reid (D-Nev.) said on the Senate floor Sunday night.
“At this point I think I can say with a high degree of confidence that there is now a framework to review that will ensure significant cuts in Washington spending,” said Minority Leader Mitch McConnell (R-Ky.)
“We can assure the American people tonight that the United States of America will not for the first time in our history default on its obligations,” McConnell added.
In spite of the guarded optimism, all sides will face quite a sales job in getting enough lawmakers in the middle to accept a deal.
Liberals were extremely displeased with the final result of the talks, which began with Democrats saying there should be no strings attached to a debt limit increase that would enable the country pay its bills.
Then they insisted that if deficit reduction was going to be linked to the debt limit, then closing loopholes and raising taxes on the rich had to be part of the deal.
They lost completely on both counts, and House Republicans managed to pull the entire deal further and further to the right, even inserting a requirement into the agreement for a vote on a balanced budget amendment to the U.S. Constitution.
Both the Congressional Black Caucus and the Progressive Caucus in the House had called emergency meetings for Monday as details of the plan started to leak. They seemed likely to oppose the deal.
One top House aide said his boss would vote against the measure, and the aide predicted Minority leader Nancy Pelosi (D-Calif.) would not be eager to whip her members to get on board.
“This is going to be close. I think in the end, the president and Nancy are going to have to twist arms, and I’m not sure how hard she’ll work to do that,” the aide said, noting that Pelosi still remembers the infamous TARP vote where she delivered 150 of her members but Boehner did not get 100 of his.
Many of Boehner’s freshman Tea Party members also are likely to find the proposal tough to swallow, since many wanted no hike in the borrowing limit to begin with. They also wanted the passage of a balanced budget amendment to be a prerequisite for increasing the debt ceiling.
Both sides can afford to lose members if 217 representatives can still back the plan.
Boehner’s talk to his 240 members Sunday night had the greatest note of triumph.
“Now listen, this isn’t the greatest deal in the world,” he said, according to remarks his office sent out. “But it shows how much we’ve changed the terms of the debate in this town.”
He also sounded a note of vindication.
“There is nothing in this framework that violates our principles. It’s all spending cuts. The White House bid to raise taxes has been shut down,” Boehner crowed. “And as I vowed back in May — when everyone thought I was crazy for saying it — every dollar of debt-limit increase will be matched by more than a dollar of spending cuts.”
Notably, Pelosi was the only of the four congressional leaders not to pledge support for the plan.
“I look forward to reviewing the legislation with my Caucus to see what level of support we can provide,” she said in a statement.
Gang Of Six Unveils Debt-Reduction Plan
July 19, 2011
As reported in Huffinton Post by Ryan Grim and Elise Foley
WASHINGTON — More than half the Senate was convened early Tuesday morning by Sen. Mark Warner (D-Va.) for a briefing on a deficit-reduction plan being negotiated by group of five senators from both parties once known as the “Gang of Six.”
The gang had previously comprised six lawmakers before Sen. Tom Coburn (R-Okla.) abandoned the talks, rebuking Democrats for being unwilling to cut Social Security or Medicare. Yet Coburn had heavy praise for the plan outlined Tuesday morning, raising hopes (and fears) that the gang may be getting back together.
Senators were effusive about the plan after the briefing meeting, calling it “great” and saying it would likely gain support from a majority of the Senate. The plan includes $1.5 trillion in tax cuts, managed by spending caps and cuts to government programs.
“We’ve gone from a Gang of Six to a mob of 50,” said Sen. Joe Manchin (D-W.V.) after the meeting.
More than half of the Senate arrived to hear about the debt-reduction plan Tuesday morning, and the general atmosphere was positive, said Sen. Susan Collins (R-Maine).
“Everyone felt a sense of relief that there was a bipartisan, carefully constructed plan before us,” she told reporters outside the meeting.
A Senate Democratic aide familiar with the negotiations with Coburn said that the Oklahoma senator had refused Democratic entreaties, even after cuts to entitlements were offered. But now that the five other Senators are moving forward without him, the aide said, Coburn is more interested in being involved again.
A different Senate aide said it remains unclear whether there is enough time to move forward with the plan before Aug. 2, the date the Treasury Department predicts the federal government could begin defaulting on its debt. But Collins said the Gang has completed enough work on their deal that it could be ready in time for a pre-Aug. 2 vote.
“They have done so much work that a lot of the issues have been gone through, and they’re in the midst of drafting statutory language,” Collins said. “I believe it should be considered in conjunction with the debt ceiling plan.”
Sen. Kay Bailey Hutchison (R-Texas) said the plan could gain traction in the Senate and even in the Republican-controlled House, which is committed to major spending cuts.
“I think if you look at the details here, they will see it does lots of things they’ve called for,” Hutchison told reporters.
“They have come up with a plan that can get a majority vote in the Senate, very likely 60,” she said, adding she would vote for the plan. “The House should like this plan because it has spending cuts.”
UPDATE 1:45 p.m.: President Barack Obama expressed some support of the Gang of Six plan during remarks to the press on Tuesday, calling the plan a “very significant step” that is “broadly consistent with the approach that I’ve urged.”
“What it says is we’ve got to be serious about reducing domestic spending, both in domestic and in defense,” he said. “We’ve got to be serious about tackling health care spending and entitlements in a serious way and we’ve got to have some additional revenue so we have an approach in which there is shared sacrifice.”
UPDATE 2:10 p.m.: The Gang of Six plan is laid out in a summary flyer obtained by HuffPost and details the group’s proposal for cutting the deficit by more than $3.6 trillion over the next decade.
The plan would immediately cut $500 billion in spending to bring down the deficit. It would also include major tax cuts, with about $1.5 trillion in overall tax savings, its authors say.
But that estimate factors in a $1.7 trillion cut to the alternative minimum tax — a tax Congress already eliminates much of every year. But even with the AMT cuts, the package raises only a net $200 billion compared to cuts of more than $3 trillion — not exactly a balanced approach.
Much of the Gang of Six plan would require other agencies and Congressional committees to work to find savings, setting up guidelines for $80 billion in armed service cuts and $70 billion from health, education, labor and pensions. Under the plan, the Budget Committee would be required to set spending caps that would extend over the next decade.
UPDATE 3:10 p.m.: Senate Majority Leader Harry Reid (D-Nev.) threw some cold water on the Gang of Six plan Tuesday, voicing doubts that the plan could be scored and passed before the Aug. 2 deadline for raising the debt ceiling.
Reid said he got a call from Congressional Budget Office Director Doug Elmendorf, who said the plan would take at least two weeks to score for cost and savings, putting the completion of that work just beyond the Aug. 2 deadline. Reid called the plan “wonderful” and said he does not want to diminish enthusiasm over it, but said alternatives still must be considered.
Reid said Sen. Mark Warner (D-Va.), a Gang of Six member, would meet with him in the next 24 hours with parts of the plan that can be incorporated into a deal brokered by Reid and Senate Minority Leader Mitch McConnell (R-Ky.) to raise the debt ceiling.
Michael McAuliff contributed to this report.
The GOP’s rude awakening on health-care repeal
January 21, 2011
Friday, January 21, 2011
This whole health-care thing isn’t quite working out the way Republicans planned. My guess is that they’ll soon try to change the subject – but I’m afraid they’re already in too deep.
Wednesday’s vote to repeal President Obama’s health insurance reform law was supposed to be a crowning triumph. We heard confident GOP predictions that cowed Democrats would defect in droves, generating unstoppable momentum that forced the Senate to obey “the will of the people” and follow suit. The Democrats’ biggest domestic accomplishment would be in ruins and Obama’s political standing would be damaged, perhaps irreparably.
What actually happened, though, is that the Republican majority managed to win the votes of just three Democrats – all of them Blue Dogs who have been consistent opponents of the reform package anyway. In terms of actual defectors, meaning Democrats who changed sides on the issue, there were none. This is momentum?
The unimpressive vote came at a moment when “the will of the people” on health care is coming into sharper focus. Most polls that offer a simple binary choice – do you like the “Obamacare” law or not – show that the reforms remain narrowly unpopular. Yet a significant fraction of those who are unhappy complain not that the reform law went too far but that it didn’t go far enough. I think of these people as the “public option” crowd.
A recent Associated Press poll found that 41 percent of those surveyed opposed the reform law and 40 percent supported it. But when asked what Congress should do, 43 percent said the law should be modified so that it does more to change the health-care system. Another 19 percent said it should be left as it is.
More troubling for the GOP, the AP poll found that just 26 percent of respondents wanted Congress to repeal the reform law completely. A recent Washington Post poll found support for outright repeal at 18 percent; a Marist poll pegged it at 30 percent.
In other words, what House Republicans just voted to do may be the will of the Tea Party, but it’s not “the will of the people.”
“The test of a first-rate intelligence,” F. Scott Fitzgerald wrote, “is the ability to hold two opposed ideas in the mind at the same time, and still retain the ability to function.” By this standard, House Republicans are geniuses. To pass the “Repealing the Job-Killing Health Care Law Act,” they had to believe that the work of the nonpartisan Congressional Budget Office is both authoritative and worthless.
The CBO, which “scores” the impact of proposed legislation, calculated that the health-reform law will reduce federal deficits by at least $143 billion through 2019. Confronted with the fact that repeal would deepen the nation’s fiscal woes, Republicans simply claimed the CBO estimate to be rubbish. Who cares what the CBO says, anyway?
Er, um, Republicans care, at least when it’s convenient. Delving into the CBO’s analysis, they unearthed a finding that they proclaimed as definitive: The reform law would eliminate 650,000 jobs. Hence “Job-Killing” in the repeal bill’s title.
One problem, though: The CBO analysis contains no such figure. It’s an extrapolation of a rough estimate of an anticipated effect that no reasonable person would describe as “job-killing.” What the budget office actually said is that there are people who would like to withdraw from the workforce – sometimes because of a chronic medical condition – but who feel compelled to continue working so they can keep their health insurance. Once the reforms take effect, these individuals will have new options. That’s where the “lost” jobs supposedly come from.
The exercise in intellectual contortion that was necessary for the House to pass the repeal bill will be an excellent tune-up for what’s supposed to come next. “Repeal and replace” was the promise – get rid of the Democrats’ reform plan and design one of their own. This is going to be fun.
It turns out that voters look forward to the day when no one can be denied insurance coverage because of preexisting conditions. They like the fact that young adults, until they are 26, can be kept on their parents’ policies. They like not having yearly or lifetime limits on benefits. The GOP is going to have to design something that looks a lot like Obamacare.
Meanwhile, Obama’s approval ratings climb higher every week. Somebody change the subject. Quick!
How Will Dereglation Effect Me in Jan 2011
October 8, 2010
As posted on Peco Website
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Helping PECO customers manage
changing times
Beginning January 1, 2011, the prices PECO and our customers pay for electricity will be based on electric market pricing. Gas and electricity will cost customers more. At the same time, PECO’s operational costs have increased.
PECO Reaches Gas and Electric Delivery Rate Case Settlements
Settlements provide necessary funds for reliable electric & natural gas service, customer support and low-income assistance
PECO today filed joint settlement petitions for consideration by the Pennsylvania Public Utility Commission (PAPUC) that reflect agreements reached with all interested groups on the increases in natural gas and electric delivery charges beginning Jan. 1, 2011.
“We are pleased to have worked cooperatively with all involved to reach these agreements,” said Denis O’Brien, PECO president and CEO. “These settlements will help us continue to provide reliable gas and electric service and quality customer care while also managing the impact of these changes to our customers.”
The settlement reflects a $20 million overall increase in natural gas delivery rates and a $225 million increase in electric delivery rates. Specifically, with these increases PECO will:
- Continue to invest in our electric and natural gas delivery systems – replacing equipment, upgrading infrastructure and investing in new technology. We plan to invest about $1.7 billion in our electric delivery system and $380 million in our natural gas delivery system during the next 5 years – ensuring reliable service to customers and employing thousands of people in our regional workforce.
- Continue to improve customer service, and expand our natural gas energy efficiency programs.
- Increase assistance to low-income customers by providing more tailored assistance programs and limiting total program costs.
PSEG Electricity
August 13, 2010
As reported by PSEG
About Deregulation
Before Deregulation
Prior to New Jersey’s restructuring, PSE&G was responsible for generating electricity, transmitting the power to all regions of their service territory, distributing the power to the individual homes and businesses, and billing and service issues. In addition, they were also responsible for all repairs to the electric lines and equipment.
After Deregulation
As a result of the New Jersey Energy Choice Program, the different responsibilities of the utilities were “unbundled” and the power industry was separated into four divisions: generation, transmission, and distribution, and energy services. The generation sector has been deregulated and, as a result, utilities are no longer the sole producers of electricity. The transmission and distribution sectors remain subject to regulation – either by the federal government or the New Jersey Board of Public Utilities. No matter which electricity supplier you choose, PSE&G will continue to service the transmission and distribution sectors of your electricity.
Competition is allowed between companies to provide power at discounted rates and superb customer service directly to customers. These companies are licensed by the state of New Jersey. You also have the opportunity to work with an electricity broker or consultant who can compare different offers and provide additional services to help manage your energy spending.
In most cases, PSE&G will continue to send you your utility bill. So the only thing that changes if you shop for a better rate is that better rate.
Our Perspective:
Deregulation of utilities has open the door to great opportunities for savings if you are a commercial or industrial customer using over $5000 a month of electric.
The local provider (PSEG and AC Elecric) buy energy on the wholesale market and then bills their clients at retail prices. Hutchinson Business Solutions (HBS) puts our clients in the wholesale position.
The savings fall to the bottom line.
HBS is an independent energy management consultant who has strategic partnerships with all the major deregulated energy providers selling energy in NJ and PA. Our clients are finding savings ranging from 10% upto 25% in the deregulated energy market.
Each account is unique. Your current pricing is based on summer/ winter pricing and also on peak and off peak usages. We will do a complete evaluation of your annual usages and shop the market to find the best provider that will offer low fixed priced savings.
To learn more about deregulated saving email george@hbsadvantage.com
PA Deregulation
August 6, 2010
Excerps reported by Commercial Utility Consultants
This is an article we found to be very informative. It presents a very thorough overview of how the current electric market works and what to expect as of Jan 2011.
As you may be aware, PECO’s rates are in the process of being restructured and the new rate structure will take effect January 1, 2011. The good news is that the Transition charges that are currently applied to all PECO customers’ bills will no longer be applied. These charges were awarded to PECO when electric deregulation was initiated in Pennsylvania back in 1998 and have been collected via customers’ billings for the last 11 years. Effective January 1, 2011, transition charges which range from approximately 25% to 30% of total PECO billings will be eliminated from the bills.
At the same time the Transition charges are phased out, PECO will begin to charge market based prices for generation. In return for the Transition charges that PECO was awarded in 1998, the PUC mandated that PECO cap their generation charges at essentially the 1998 rates. The generation rate caps that have been in effect since 1999 are scheduled to expire on December 31, 2010 and the new charges for generation will be effective on the January to February 2011 billings. Since generation charges currently constitute more than 50% of PECO bills, these increases will more than offset the impact of the phase out of the transition charges.
PECO customers will be divided into four distinctive classes for purposes of default service procurement. These classes will be defined as the Residential Class (R), Small Commercial & Industrial Class (SC&I), Medium Commercial & Industrial Class (MC&I) and Large Commercial & Industrial Class (LC&I). The following is how the last three of these rates classes will be defined: The SC&I class is defined as Commercial Customers with an annual peak demand of less than or equal to 100 KW; the MC&I class is defined to be customers with a peak demand greater than 100 KW and less than or equal to 500 KW and the LC&I class is defined to be customers with peak demands greater than 500 KW.
The above rate classes will determine how PECO will procure default service supply for these customers. The fixed price default service for calendar year 2011 for the SC&I and MC&I customers will be determined through a series of three auctions in the fall 2009, spring 2010 and fall 2010. Default service for LC&I customers will be procured through two auctions; one in the spring 2010 and one in the fall 2010.
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Since customers are not required to make a commitment prior to the auctions being completed and the price released, PECO will be asking suppliers to submit price quotes for an unknown quantity of power and for an unknown combined load profile. Accordingly, suppliers will need to build a great deal of risk into their price quotes given the fact PECO will not know the amount of power they will need or the combined load profile of the customers they will be serving. In addition, suppliers will not know the credit worthiness of the customers that will select the PECO fixed price option. With the amount of risk each supplier will have to build into their price, we do not anticipate the PECO default fixed price service to be the most competitive price available.
Any LC&I customer that does not opt into the fixed price service and still wants to remain a full service PECO customer will receive day ahead hourly pricing for 2011 as its default service. Under this scenario, PECO will measure the amount of electricity used each hour and apply the PJM LMP day ahead price to each hour’s usage. The hourly price of electricity is extremely volatile and most financial people shy away from this option as it is not very budget friendly.
Customers will also have the option to purchase power from a third party electric generation supplier (EGS) on a negotiated contract basis. Third party suppliers will offer customers a wide variety of options from a full requirement fixed price to hourly indexed pricing based on one of the several PJM markets. PJM is the local power pool that handles energy transactions in PECO and many other utility areas. PJM pricing can be extremely volatile. The PJM market price for electricity in June 2008 was $98.00 per MWH or 9.8¢ per KWH. In June 2009, the PJM market settled at $45.00 per MWH or less than half of what it was a year earlier. The timing of PECO’s auction and when customers shop for their electric supply will be a major factor in determining what the best option will be. HBS will be available to assist in this process and will be able to provide pricing from all major licensed EGSs should you be interested.
While there will be an increase in the cost of electricity for most customers, the increase for those customers receiving special discounts or riders will be more substantial. Most of the discounts and riders that PECO currently offers are scheduled to be phased out at the end of 2010 further impacting the increase in overall electric costs for some PECO customers. Discounts currently applied will still be applied but only to the distribution portion of the bills.
There are two major ways to mitigate the increase in electricity costs that will inevitably occur in 2011. The first would be to shift major electrical usage operations to off-peak hours when prices for electricity are cheaper. The hourly price of electricity varies like no other commodity and prices can double or triple in a single hour. This is especially true in summer months when hot weather is a major factor in determining the hourly PJM price. Unfortunately, most industrial customers do not have the luxury of shifting major energy using operations to off-peak hours.
Another means to reduce projected costs would be to reduce consumption. There are a number of ways in which this can be accomplished including increasing the electrical efficiency of major energy consuming equipment. In most cases, the most straightforward and cost effective way of reducing consumption is to replace inefficient lighting with newer higher efficiency lighting. Typically, a payback period of less than two years is attainable. While these lighting projects may not have made economic sense in the past when the cost of electricity was lower, with the future price of electricity increasing, the economics of these projects could improve significantly. HBS is available to assist in analyzing the results of previous lighting studies, performing a new study and/or recommending reputable companies from which to solicit proposals to perform this type of work.
Our perspective:
There is a lot of information being bantered about regarding deregulation beginning in Jan 2011.
Be sure to know all the facts.
Just what part of your bill will be effected. What are you currently paying for those items and what are the projected cost.
Should you be speaking to a broker or one of the approved providers, bve sure to ask if the price is fully loaded.
Does it include 7% loss allowance and the gross receipt tax.
Some providers are not including these items but that does not mean you will not be paying them.
to learn more email george@hbsadvantage.com
HBS is an independent energy management consultant. We have been providing deregulated saving to our clients for over 10 years.
We represent all the major providers selling energy in NJ and PA. We will define what provider(s) will be most competitive for your market and get you the best price.
Contact us today:
Smart Solutions for Smart Business
Businesses go shopping for electricity
June 24, 2010
By Andrew Maykuth
Inquirer Staff Writer
Brace yourself for power shopping – and we’re not talking about a marathon outing at the mall.
Nearly two dozen energy companies are scrambling to sign up Peco Energy Co.’s biggest, most lucrative customers – the commercial and industrial users – in preparation for electric deregulation at the end of this year.
About 110 customers of the Philadelphia utility attended a seminar Tuesday at the Union League to learn more about the implications of electric choice. The bottom line: Large customers should shop around for power, because their competitors are, too.
“This is a wonderful opportunity for you to save money,” James H. Cawley, chairman of the Pennsylvania Public Utility Commission, told the seminar, sponsored by one supplier, GDF Suez Energy Resources.
The PUC is promoting energy choice as an option for customers to fashion a deal specific to their needs. A school district, for example, might bargain for a lower price because its facilities are closed in the summer, when power costs more. A business promoting its green image might buy from renewable suppliers that generate from wind, solar, or hydroelectric plants.
“You have a choice to get your electricity from somebody else who can be much more attentive to your individual needs, your own risk tolerance, your own environmental desires,” Cawley said.
Under the Electricity Generation Choice and Competition Act, utilities hived off their power-generation units and will now make their money strictly by distributing power on their lines.
The utilities’ rates were capped at 1996 levels to allow them to ease the transition to competitive markets.
For Peco, the rate caps will be lifted at the end of this year. Customers who don’t want to shop around can stay with the utility’s “default rate.”
For large customers, Cawley said, the default rate is likely not the best deal because it contains a significant “risk premium” for Peco to lock in prices now. Alternative suppliers are more nimble in fashioning rates to suit the needs of specific users.
“Don’t sit there and take the default rates,” he said, without endorsing any specific alternative supplier. “You’re silly to do that.”
Cawley said many customers were still confused over the roles played by the traditional utility that distributes power and those companies that generate it. Peco, as a distribution company, will still provide customer service and billing for most users.
“People don’t understand this distinction between distribution and generation,” he said. “Your electric-distribution company does not care if you shop. . . . In fact, they’d like you to shop.”
Since the rate caps came off on Jan. 1 for customers of PPL Electric Utilities, the Allentown company reported that 32 percent of its total customers have switched to alternative suppliers, according to the PUC.
But nearly 80 percent of its large commercial and industrial customers have switched. All told, 75 percent of PPL’s load – the number of kilowatt hours transmitted through its wires – is now supplied by alternative companies.
Marketing efforts aimed at Peco’s residential customers are not expected to materialize until late in the year – and officials expect only a small percentage of customers will be inclined to switch.
The reason: Though PPL’s default rate went up more than 30 percent this year, Peco’s is expected to increase only about 10 percent from current rates, Peco president Denis O’Brien said in a recent interview.
But commercial and industrial customers – who represent about 10 percent of Peco’s 1.6 million customers – are a different story.
Even a small percentage of savings is attractive to a big customer whose annual electric bill might total millions of dollars.
“The larger customers are keyed into this because it’s such a big part of their costs,” said Tom Petrella, regional sales manager for Hess Energy Marketing, which also had a Center City educational seminar Tuesday.
Many of the 21 suppliers registered with the PUC to supply electricity to large Peco customers are the marketing arms of other utilities with familiar names: Con Edison Solutions, First Energy Solutions, UGI Energy Services, and Allegheny Energy Supply Co.
Exelon Energy Co. is among the competitors selling power directly to Peco customers – both companies are owned by Exelon Corp.
Some suppliers have adopted more public marketing campaigns: PPL EnergyPlus, a sister company of PPL Electric, bought the naming rights to the new professional soccer stadium in Chester this year to help raise its profile.
GDF Suez, the company that held the Union League seminar Tuesday, bills itself as the “biggest company you’ve never heard of.”
The $109 billion French company is the world’s largest utility, has 200,000 employees, according to Forbes magazine, and is among the largest suppliers of power in the United States.
Like many suppliers, it has opened an office in the Philadelphia area.
Our Perspective:
Deregulation has recently presented great opportunities for business to find savings from 10% to 25%. The current natural gas and electric commodity prices are the lowest they have been in the last 4 years.
Remember, savings is a parity of how much you spend. We have small clients saving $5,000 to $10,000 a year, while larger clients are saving $100,000 to $200,000.
Not bad! It is like receiving a gift.
We are currently waiting for Peco to release their price to compare figure. This will serve as the basis to determone what value deregulation will bring to the Peco territory. If Peco’s prices pare to what PPL is currently charging, you will be finding savings running between 15% to 20%.
Who qualifies?
If you are currently spending a minimum of $5,000 a month on natural gas or $5,000 a month on electric, you should be looking at the dergulated market for savings.
The first step is easy. All we need is a copy of your latest invoice from Peco. We will also need you to sign a LOA (letter of authorization), which will allow us to request annal usages for your accont from Peco.
With this information, we are then ready to spreak to the providers looking to sell electric.
Hutchinsson Business Solutions (HBS) is an independent energy management company. We have been providing deregulated saving opportunities to our clients for over 10 years. We have strategic partnerships with all the maajor providers looking to sell electric in PA.
We know the market and we know the sweet spots each provider looks to participate in.
We will validate what you currently are paying. Define what you will be paying, should you remain with Peco. We will present opportunites for savings in the deregulated market.
There are no fees for our services for we receive a small residual from the providers.
To learn more about dergulated saving opportunities email george@hbsadvantage.com or call 856-857-1230
Read more: http://www.philly.com/philly/business/homepage/20100616_Peco_Energy_customers_at_seminar_on_electrical_deregulation.html#ixzz0rnTAXq3t
Watch sports videos you won’t find anywhere else
NJ Deregulated Energy Industry
June 4, 2010
By Chrysa Smith
It’s been said that choice is the ultimate luxury. Since 1999, New Jersey businesses and residents have had the luxury of choosing which utility company from which to purchase gas, electricity, and heating fuel; but with choice often comes challenge. Along with their new options and the predicted benefits of a more competitive marketplace, New Jersey residents have also had to deal with the changes and questions raised by the state government’s deregulation of energy providers.
The Balance of Power
In 1999, the New Jersey Board of Public Utilities (NJBPU)—the governing body for electric, oil and natural gas services—introduced a bill to deregulate the state’s energy industry for residential customers. (New Jersey’s commercial energy market had been opened up earlier in what some say was an attempt to keep local corporations happy and committed to staying put.)
The goal of the Electric Discount and Energy Competition Act (EDECA) was to enable New Jersey energy consumers to shop around and chose the energy provider that best suited their budget and service requirements. The free-market rationale hinged on the prediction that enough healthy competition between providers would keep prices down while offering better service and reliability to customers. Under the auspices of the federal Department of Energy, New Jersey took measures to safeguard free market competition for electricity and gas, including the requirement for the NJBPU to “unplug” power stations with higher costs than other available energy sources.
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According to Betty Kennedy, public relations coordinator for Conectiv Power Delivery, an independent utility provider based in Carney’s Point, New Jersey. “Up till 1999, when the state voted to restructure the energy industry, each company had a specific service area.”
Conectiv—which services eight counties in southern New Jersey—claims that the deregulation has reduced their customer’s rates by 10.2 percent, saving them a cumulative $290 million during the years from 1999 to 2003.
But the story is a bit more complex. Conectiv, and the states other 21 licensed electric suppliers and 29 licensed natural gas suppliers are, as their names indicate, suppliers. They provide the hardware—the lines and cables—and once those are in place, they also provide the power that flows to New Jersey commercial and residential customers. That power may have been purchased from companies several states away, or it could come from oil, coal or renewable energy sources. Energy may even be bought and sold much like the stocks in an investment portfolio. If it’s important for a customer to know where the cool flow from their central air system comes from, or the juice that runs the building elevator, post-deregulation, that customer now has a voice.
According to Terry Moran, manager of Retail Choice for Public Service Electric & Gas (PSE&G) in Newark, New Jersey’s largest energy provider, “Since the transition period for New Jersey, the largest change is that we no longer own generation. We are now a pipes-and-wires company.”
Enter the ESCOs
Though the playing field has changed somewhat, the delivery companies—called Energy Service Companies, or ESCOs – have remained essentially the same. Since deregulation, it’s the transmission that has changed. Out-of-area transmission companies, called third-party suppliers, are now in competition with area companies who once dominated their own market.
“The restructuring act has allowed New Jersey to move forward to look for better prices in the state,” says Kennedy. “Our customers pay less than they did in ’99.” This has been accomplished, thanks in part to the annual Basic Generation Service, or BGS, auction. Each February, according to PSE&G spokesperson Karen Johnson, transmission companies gather together to offer energy packages to service providers. Suppliers can pick up an energy contract for a year or two, or more at wholesale auction.
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“For the customers that have chosen to stay with [us],” says Johnson, “we secure the power through the annual energy auction that allows them to buy in a wholesale [market], where prices are competitive. PSE&G is the utility that is part of the Public Service Enterprise Group (PSEG) parent company, who also owns PSEG Power—the unregulated generation side.”
And, says Kennedy, much like commodities of all kinds, the buying can be ‘locked in’ at a specific rate—called fixed pricing—or float with the market value through its natural cycle of ups and downs—called variable pricing.
Not a Flawless System
While the provision of greater choice and potentially lower costs seems appealing, the program has not been without its problems. According to a report published by The New Jersey Public Interest Research Group’s Citizen Lobby and Law & Policy Center in Trenton, “New Jersey pays 50 percent more than the national average for our electricity. And energy providers, for the most part, are offering the same old fossil-fuel and nuclear-generated electricity.” For the programs first four years, the rates were frozen for electric utilities, and some customers actually saw savings of 10 percent on their electric bills. Yet now, as pricing caps come off kilowatt rates, it remains to be seen what the full affect will be.
“One of the biggest fallacies of deregulation,” says Janet Garofalow, assistant vice president and manager of sales and marketing for Castle Power LLC—a Harrison, New York-based fuel oil and natural gas service provider with a satellite office in Englewood—”is that we can’t guarantee that we can save our customers money in comparison to the utility commodity cost when they fix a price at a certain time. We can’t predict what the market will do going forward.”
Garofalow goes on to explain that to a large extent, the market is controlled by the weather. “In the winter, one reason for gas prices rising is the cost of transportation for the gas, due to increased demand. In the winter of 2002, when we never wore a winter coat, pricing came down.” To a large extent, the energy market is a gamble in commodities futures—where knowledge of the market and good planning come into play.
Maneuvering Through the Maze
One of the biggest attractions to third-party energy suppliers has been the advent of aggregation. And it may just be one of the largest benefits to multiple dwelling communities sharing real estate management companies. According to Alyssa Weinberger, director of regulatory affairs for Hess Energy Marketing in Woodbridge, “Buying bulk would be advantageous. With an aggregation of individual customers into larger groups, you can get better deals.”
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Hess—along with several other suppliers who deal with commercial and industrial customers—have done just this for multiple dwelling communities, and even area school districts, in order to reduce costs. Management companies should be aware of these and other options for energy conservation under current energy systems.
Most ESCOs and third party suppliers will tell you that their marketing efforts have not been anything like those of the deregulated phone companies, and that the resulting switching of suppliers—at least on the residential side—has been marginal. Right now, the BPU estimates that third party suppliers represent less than six percent of service to gas customers and fewer than 3.5 percent for electric supply switchers.
According to Johnson, PSE&G currently has 1.6 million gas customers and two million electric customers. “Some have both gas and electric,” says Johnson. “We serve about 75 percent of the state’s population on a north-south diagonal that follows the New Jersey Turnpike.”
“The percentage of customers who have changed is not large,” adds Moran. “On the electric side, most of those who have switched have been the largest customers. We roughly have about 18 percent of our [megawatt] load switched. For gas, we have roughly 30,000 customers who have switched to third party suppliers.”
If you think your association might benefit from joining that percentage, all it takes to make a change is a phone call and a signed contract—which some suppliers say can be done by a board member. Yet, in this transition period, and in the age of all too common legal proceedings, having the input of an informed accountant and an attorney review would be prudent. Especially in the case of buying power for entire communities, the stakes are high, contracts are involved and costs of litigation even greater.
“You need a service provider who you can go to and ask questions,” Garofalow adds, “Although [the energy business] isn’t rocket science, it is complex.” Before your board even thinks of making any changes in your utility provider, it makes sense to be sure that the people responsible for the purchase of energy understand the terms, the bills and the contracts.
According to Moran, “Billing can be done in a few different ways. For Basic Generation Services (BGS), all charges can be contained in one utility bill. Third party suppliers have a variety of options that are set forth in their contracts.”
Like a fixed mortgage, a fixed rate is fairly straightforward, and can be budgeted for accordingly. For a variable rate, it helps to know the index to which the rate is tied. According to Weinberger, “Some large customers have been put on hourly pricing versus a fixed rate—the advantage being that you pay for what you really use, with the ability to see where spikes are.”
Eric Hartsfield, a spokesperson for the NJBPU, indicates there are many options. “In the case of a condo, you may have one company providing service for the common/general areas, while another may provide service to the individual unit owners.”
Other Considerations
It also helps to be informed about the latest programs from providers that may benefit your community down the road.
“We recommend that dual-fuel boilers be put in if possible and if it makes economic sense to the customer,” says Garofalow—providing the option of burning natural gas or alternate fuel as the state of the market may dictate. Programs like the New Jersey Clean Energy Program (www.njcleanenergy.com) offer multiple promotions that provide cash incentives for changing systems that are cleaner or more efficient. So, when a community looks at their energy costs, they might consider replacement time for heat pumps, air conditioning systems and boilers in addition to their bills. If timing is right, there could be savings all around.
Information is out there, however, in the form of conferences, customer awareness programs and directly from the BPU (www.bpu.state.nj.us). The more informed the management company, condo or co-op board, the easier it will be to maneuver through this kilowatt maze without it becoming a drain on an association’s time and budget.
To find out more about saving opportunities in the NJ deregulated utility market email george@hbsadvantage.com or call 856-857-1230.
Chrysa Smith is a freelance writer and a frequent contributor to The New Jersey Cooperator.
Deregulation FAQ.
May 24, 2010
As reported in NJ Electricity Review
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New Jersey Electricity Review
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 Your Current Electric ProviderSince New Jersey restructured its electricity market, the incumbent providers (PSEG, JCPL, Atlantic City Electric (Conectiv), Rockland Electric) are now solely in the business of managing the lines and wires portion of your electricity service. They are not in the business of offering competitive supply prices. However, they have been given the responsibility to provide high default rates for those business consumers who have not chosen a competitive supplier. |
| Why should I get off of the Default Rate?
There is a misconception in New Jersey that your current provider will be upset if you choose another company to supply your energy. This could not be more untrue. The incumbent providers (PSEG, JCPL, ACE, Rockland) are regulated lines and wires companies whose revenues and profit margins are managed by the state. They do not receive profits for the supply portion of the bill and would rather see all of their customers receive supply service from alternative providers so that they can focus on the reliability and customer service of the power lines.
However, because deregulation is a fairly new concept, the New Jersey State Public Commission Board has mandated that the incumbent providers provide a default service for those customers who are slow to choose a competitive supplier. Due to recent market conditions, the fixed rates that are available in the competitive market are significantly lower than the high default rates, by as much as 15-30% . |
| What Does Deregulation Mean to Me?The deregulated energy market in New Jersey provides the opportunity for all businesses to experience huge savings in their energy spending. The hurdle is knowing when and how to see these savings. Fixed generation rates, bandwidth limitations, ancillary charges, congestion fees, and blend-and-extend price adjustment clauses are just a few elements worth understanding to realize your potential savings. |
| How Can I Save Money?In order to see the maximum savings it is essential to work with a firm who represents you, not the provider, and who are experts in all deregulated energy markets, electricity contract negotiations, and the natural gas market..
By representing your company or organization we will force several providers to compete for your business resulting in lower rates and more favorable contract concessions. We will provide you with a full savings analysis that will compare your current default rate versus the low fixed rates we are able to find. Once the contract is executed we will continue to monitor the market on your behalf and look for opportunities to renegotiate and lower the rate even further.
Should you like to know more about opportunities to save in the NJ deregulated natural gas and electric market email george@hbsadvantage.com |
