Utility Deregulation Can Save You Money

Posted by Nicole on August 27, 2010 at 10:00 am as appeared in Rainy Day Saver

For years, utility companies had a monopoly in a number of areas: electricity and gas, finance, transportation and communication. But in the past decade, federal and state governments have chosen to deregulate certain utilities and encourage free market competition. Why wouldn’t you want the freedom to choose which company provides your electricity, especially if the rates are cheaper than the one company that had control of the market for decades?

A co-worker recently mentioned that she was switching utility supply providers from PSE&G, which was the only electric and gas provider for households across northern New Jersey for ages.  These energy utilities have supply and delivery charges, at different rates, depending on how much electricity or gas units are used. By changing the supply provider, the per-unit charge will be reduced from ~.12 to ~.09. It doesn’t sound like a lot, but it will make a big difference in the winter, when the heat is on, and in the summers, when air conditioning use is in full force.

There are a number of alternative energy providers out there, and it may pay for you to check out their rates and compare them to your current utility provider. For us, if we switched our energy supplier, PSE&G would still provide the method of delivery through its power lines and natural gas piping; those costs will be included on your bill. But the delivery charges are generally lower than the supply charges.

Regulation History

The initial outlay for all of the communication, electric and gas lines crisscrossing America was a lot of money for the companies who decided to invest in these burgeoning markets. To protect the companies’ investments, the federal government regulated these industries, eliminating competition. While the intent was good, this led to the monopolization of these industries and a lack of choice for consumers, who were forced to accept whatever rates were charged.

This eventually led to companies having too much of a say within the government regulatory committees, and consumer interests fell by the wayside. Eventually, a deregulation movement started in the 1970s, affecting transportation and, to a lesser degree, energy companies. Over time, each state has made the decision whether to deregulate or leave the old regulation policies in place.

A number of states (including my state of New Jersey) have deregulated both natural gas and electric utilities; some just offer one or the other; and then there are the nearly two dozen that still heavily regulate the industries.

Our Perspective:

Deregulation began in 1997 to bring competition to the utility market. If you are a business and you natural gas and electric bills are currently rnning more than $5000 a piece, you should be looking at the opportunities for savings.

Both natural gas and electric market prices are at the lowest they have been in over 4 years. Or clients are saving from 10% upto 25% based on their usage patterns.

To learn more email george@hbsadvantage.com. We offer a free review of your current cost and will find the right supplier for your company to maximize savings.

Solar Battle Heats Up

New Jersey has set aggressive goals for its solar industry. The question now is can it afford to meet them.

By Tom Johnson, August 31 in Energy & Environment |6 Comments

By most accounts New Jersey’s solar industry has enjoyed a remarkable run in recent years, installing up to 180 megawatts of capacity, enough to vault it at one point to behind only California in the number of solar installations.

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Clean energy advocates credit the solar industry with creating more than 2,000 jobs, a number expected to climb to 3,500 by the end of the year. And the more than 200 firms involved in the industry boost their argument that a green economy can only bolster New Jersey’s prospects for growth.

Yet the industry is facing tough questions from the Christie administration. The concern is cost: How expensive will it be to meet aggressive goals to increase New Jersey’s reliance on solar energy, a situation some argue is driving up the price of electric power in a state that already has high energy expenditures.

The Solar Balancing Act

The focus on solar occurs as the state Board of Public Utilities is trying to pinpoint ways to reduce utility bills while complying with legislation that increases solar energy goals dramatically.

By 2026, a bill passed this past January directs the state to have solar capacity of 5,000 megawatts, roughly equivalent to the output of five nuclear power plants. At the same time, funding for clean energy programs is being sharply curtailed and the agency is rethinking the state’s energy master plan and its ambitious goals for renewable energy.

What is worrisome to skeptics is the cost of solar energy today is still much higher than conventional energy. They note that solar renewable energy certificates on the spot market sell for around $670, or the equivalent of 60 cents per kilowatt hour. (Solar certificates are the price owners of solar systems earn for electricity they generate.) In comparison, consumers pay about 11 cents per kilowatt hour for electricity generated by conventional power plants.

Supply and Demand

Many solar advocates are frustrated because the debate is losing sight of the benefits the sector has delivered to New Jersey. They concede the price for the solar certificates is too high, but argue it is a function of demand outstripping supply and insist prices will drop when supply and demand are more in balance.

“There’s been not enough credit to the local solar industry that has developed,’’ said Fred Zalcman, director of regulatory affairs in eastern states for SunEdison, a large solar firm. “It’s created a lot of local jobs.’’

Others are blunter. “We believe solar is falling out of favor with this administration,’’ said Dolores Phillips, executive director of the Mid-Atlantic Solar Energy Industries Association, noting only $3.2 million is allocated to the solar residential program in a straw budget proposal for next year. “Too many discussions are taking place behind closed doors.’’

Developing Solar Responsibly

To some, though, the debate is timely. If New Jersey is going to pursue aggressive solar targets, then it must do it responsibly and must do it recognizing what the impact will be on ratepayers, argued Steven Goldenberg, an attorney who represents manufacturers that use tremendous amounts of energy.

Terry Sobolewski, business development manager for SunPower, said the industry needs to make its case how the rapid development of the sector in New Jersey has created thousands of well-paying jobs here, and would continue to do so if the state stays on target to promote solar aggressively.

“Now, we’ve got 180 megawatts of installed solar and it’s created 3,500 jobs,’’ said Sobolewski, who suggested an even bigger bonanza of new jobs could be created if the state sticks with its target of 5,000 megawatts by 2026. “If you project forward, it’s a lot no matter how you slice it.’’

Lower Prices Expected

For those who argue solar is too expensive based on the spot prices being fetched by the solar certificates, Sobolewski said that argument assumes that is the price being paid for all certificates when it reflects about two-thirds of the market. Other solar certificates, which are earned under long-term contracts signed with suppliers, are averaging about $374, he said. “With more long-term contracts, the price will come down.’’

He and others argue the price of solar systems also will drop as technology improves. And as larger solar systems are built, economies of scale will drive the cost down further.

“Yes, solar is expensive right now, but we’re building an industry,’’ said Matt Elliott, clean energy advocate for Environment New Jersey. “It’s nothing new to subsidize a new energy source so long as the costs keep going down and the technology is improving.’’

Beyond the issue of the solar certificates, advocates argue when trying to assess the cost of various programs, the state ought to consider the benefits. For instance, solar power replaces electricity generated by peaking plants, which are the most expensive ways of producing power and increase the cost of electricity for everyone. Solar produces the most power on days when peak plants generally run, typically, the hottest summer days when the sun is shining.

Electric Consumption Up Over the Last Year

Generation: Net generation in the United States rose 8.0 percent from June 2009 to June 2010. The National Oceanic and Atmospheric Administration (NOAA) reported that the contiguous U.S. temperature-related energy demand (REDTI) was the second highest June value on record as “the unusual warmth in the highly populated South and Southeast” weighed heavily. The Federal Reserve reported that industrial production was 8.2 percent higher than it had been in June 2009, the sixth consecutive month that industrial production was higher than it had been in the corresponding months of the previous year.

The rise in coal-fired generation was the largest absolute fuel-specific increase from June 2009 to June 2010 as it was up 17,483 thousand megawatthours or 11.8 percent, and represented over three-fifths of the overall national rise in generation. Texas, Ohio, Alabama, and Pennsylvania showed the biggest gains over June 2009, but the gains were widespread as only 8 of the 48 States reporting coal-fired generation showed lower totals in June 2010. Natural gas-fired generation was second to coal as it was up 8,121 thousand megawatthours, or 9.6 percent. New York, Florida, Massachusetts, Virginia, and Louisiana accounted for 62.0 percent of the national increase. Nuclear generation was down 2.1 percent or 1,434 thousand megawatthours – the largest absolute fuel-specific decline – as there were refueling outages at the Davis Besse, Crystal River, and H B Robinson plants that led to generation totals for these three plants that were far below what they had been in June 2009.

Generation from conventional hydroelectric sources increased 0.6 percent, or 164 thousand megawatthours. The higher level of hydroelectric generation in California was by far the largest contributor to the national rise. Generation from wind was up 44.2 percent, or 2,388 thousand megawatthours. Wind was the energy source with the third-highest absolute megawatthour increase over June 2009. Increased wind generation in Texas, Washington, Kansas, and Oklahoma accounted for 55.1 percent of the national rise. Petroleum liquid-fired generation was up 28.8 percent compared to a year ago, but its overall share of net generation continued to be quite small compared to coal, nuclear, natural gas-fired, and hydroelectric sources. Figure 1 shows net generation by month for the last 12 months.

Figure 1: Net Generation by Major Energy Source: Total (All Sectors), July 2009 through June 2010

Year-to-date, total net generation increased 3.4 percent from 2009 levels. Net generation attributable to coal-fired plants rose 6.2 percent. Natural gas-fired generation was up 5.2 percent. Nuclear generation declined 1.3 percent, and petroleum liquid-fired generation was down 23.4 percent.

Year-to-date, coal-fired plants contributed 45.9 percent of the power generated in the United States. Natural gas-fired plants contributed 21.8 percent, and nuclear plants contributed 19.9 percent. Of the 0.9 percent contributed by petroleum-fired plants, petroleum liquids represented 0.6 percent, with the remainder from petroleum coke. Conventional hydroelectric sources provided 6.8 percent of the total, while other renewables (biomass, geothermal, solar, and wind) and other miscellaneous energy sources generated the remaining 4.4 percent of electric power (Figure 2).

Figure 2: Net Generation Shares by Energy Source: Total (All Sectors), Year-to-Date through June, 2010

Consumption of Fuels: Consumption of coal for power generation in June 2010 was up 10.4 percent compared to June 2009. Consumption of natural gas rose 10.0 percent. For the same time period, consumption of petroleum liquids was up 27.9 percent, while petroleum coke rose 15.2 percent.

Helping PECO customers manage

From Peco website

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.

We want to help you manage these changes. This Web site will help keep you informed, answer questions and offer strategies to help save or offset much of the increase. Please look around. If you can’t find the answer here, let us know and we promise to find it for you.

For more information, visit: www.pecoanswers.com

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.

Click here to view the press release

 

Because energy prices have gone up during the more than 10 years electricity prices have been capped in Pennsylvania, PECO’s rates, beginning in January 2011, will reflect those rising prices. We want to help you manage these rising costs.

We know change can be difficult, but to help ease the transition, we have created this Web site to provide tools and tips to help you use energy more efficiently and better manage your electric costs. Conservation is key.  And this site contains great information to help you conserve.

Our goal is to keep you in the know, so please explore this site and check back for exciting new ideas, programs and services as we near the final transition to market-based rates on Jan. 1, 2011.

Denis P. O’Brien
PECO President and CEO

As part of our ongoing commitment to keep customers informed, I would like to welcome you to www.peco.com/know, a site dedicated to keeping you “in the know” about the transition from capped electric rates to electric rates based on market prices.  

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.

We want to help you manage these changes. This Web site will help keep you informed, answer questions and offer strategies to help save or offset much of the increase. Please look around. If you can’t find the answer here, let us know and we promise to find it for you.

For more information, visit: www.pecoanswers.com

 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.

Click here to view the press release

 

As part of our ongoing commitment to keep customers informed, I would like to welcome you to www.peco.com/know, a site dedicated to keeping you “in the know” about the transition from capped electric rates to electric rates based on market prices. 

Because energy prices have gone up during the more than 10 years electricity prices have been capped in Pennsylvania, PECO’s rates, beginning in January 2011, will reflect those rising prices. We want to help you manage these rising costs.

We know change can be difficult, but to help ease the transition, we have created this Web site to provide tools and tips to help you use energy more efficiently and better manage your electric costs. Conservation is key.  And this site contains great information to help you conserve.

Our goal is to keep you in the know, so please explore this site and check back for exciting new ideas, programs and services as we near the final transition to market-based rates on Jan. 1, 2011.

Denis P. O’Brien
PECO President and CEO