What does Peco Deregulation Mean?

June 15, 2010

PECO is unleashing multiple programs to try to prepare their customers for increases in their electric rates in 2011.  The PA Public Utilities Commission announced that Pennsylvania utility companies will be increasing the rates for electricity delivery service in 2011.  In addition, price caps will be expiring in 2011 in the PECO area – as well as Met-Ed, Penn Electric, and West Penn – which are expected to increase default generation rates by as much as 20%.

PECO wants to help customers deal with the increases, so they have several programs including the PECO Smart Home E-Audit, Smart Lighting Discounts, Smart Home Rebates, and Smart Appliance Recycling.  They are pretty smart programs. But the smartest way customers will be able to reduce their electricity bill is by looking for an alternative supplier that will offer a lower rate against the PECO price. 

PECO is going to continue to deliver power to those customers who they are currently delivering to and they’ll continue to send invoices out.  The decision to choose an alternative electric company will be a simple choice to pay less.  There will be more information and rates for alternative providers as we get closer to 2011.

Before Deregulation
Before the Electricity Generation Customer Choice and Competition Act became a reality, all of the electricity purchased or transmitted in a specific region was sold by one company. In the Philadelphia region that company is PECO Energy. PECO held full rights to operate a monopoly in this region and consumers didn’t have the option to buy from any other electric supplier.  Before deregulation, electric utilities were in charge of the generation, transmission and distribution of electricity. They worked as a monopoly, and had the only rights to sell electricity in a particular region.  There are 9 electric utilities across the state of Pennsylvania that were operated under a regulated monopoly. This means that the utility supplied the power, read the meters, fixed any problems, and determined what the power sources of electric generation would be. Because electricity consumers had no option to switch companies, utilities were able to install any facilities that they thought were necessary, with little input from residents and consumers. 

After Deregulation
Now that the Electricity Generation Customer Choice and Competition Act has been fully put into action in Pennsylvania (As of January 1, 2000) every resident has the option to choose the company that generates their electricity.  Generation is now competitive. Electricity consumers can shop for a new generation supplier. The local utility is still responsible for delivering that electricity through the transmission and distribution lines. The electric utilities that once operated as controlled monopolies are now called “electric distribution companies”. They are responsible for the transmission and distribution of electricity to homes and businesses (the poles and wires).  Because the regional monopolies are still responsible for the transmission and distribution of electricity, distribution will be as reliable as it was before.  Your current distribution company (old utility) will still be in charge of certain things.  Problems with bills, downed power lines, power outages, billing complaints or concerns.  Electric distribution companies will also be called the “provider of last resort”. The provider of last resort is obligated to provide electricity service to any customer who looses service from any new electricity supplier, or are denied service from any new supplier.

It might seem a little confusing, but it’s not all going to happen overnight, all at once.  Telephone deregulation is still changing and it’s been about 10 years for that.  As technology improves and evolves, you are being presented with more choices.  It will probably be the same way for electric deregulation.  As the process evolves, an educated consumer is the best consumer.

Our Perspective:

Peco is about to release an electric price to compare that companies will be able to use as a basis to make an objective decision.  Current open market rates are very competitive and this should present a very interesting outcome.

Deregulation began in the late 1990’s, designed to bring competition to the market and provide choice and savings to the public. The deregulated market thrived for the first 5 to 6 years and then as a result of the Iraq war and Hurricane Katrina, market prices jumped and took the air out of the balloon. At the same time, Pennsylvania imposed rate caps and kept their prices well below the open market prices.

Beginning January 2011, these rate caps will be lifted and Peco customers will once again enter the deregulated market. As we wait to see where Peco prices will be in Jan 2011, clients should begin to explore what opportunities may exist. All we need is a copy of your latest Peco invoice.

Hutchinson Business Solutions is an independent deregulated energy management company. We have been providing dereglated energy solutions for our clients for over 10 years. Our clients are finding savings from 10% to 30% on the deregulated energy supply bills.

To learn more on how this opportunity may effect you, email george@hbsadvantage.com or call 856-857-1230.

2 Responses to “What does Peco Deregulation Mean?”

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