Posted on Tue, Oct. 11, 2011

By Andrew Maykuth

Inquirer Staff Writer

Peco Energy Co. electric customers may be feeling a little deregulatory
whiplash.

Since market rates went into effect this year for the Philadelphia utility’s
1.6 million customers, the price for residential electric power has gone up 12
percent. The biggest quarterly increase took effect Oct. 1 and will be reflected
in bills that go out later this month.

But take heart, customers. Without fanfare, Peco last week posted its
projected prices for Jan. 1, 2012, and it estimates residential rates will fall
dramatically, back to the point where they started in 2011.

“This is good news,” said Catherine Engel Menendez, Peco’s spokeswoman.

The quarterly adjustments are a feature of electric deregulation that went
into effect this year for Peco customers.

The major factors behind the rise and fall of rates are seasonal fluctuations
in wholesale power prices that were invisible to customers under the old
fixed-rate system. The variations became noticeable after rate caps came off and
Peco’s rates were adjusted every three months.

The price fluctuations are exaggerated in the current quarter – up 7 percent
– because Peco is allowed to recover money it did not collect earlier this year
when wholesale prices were higher than expected. The state requires utilities to
reconcile under- or over-collections in the next quarter.

Peco’s quarterly price swings add a wrinkle to the process of shopping for an
alternative electric supplier.

Under Pennsylvania’s Electric Choice Act, customers are free to shop for
power suppliers, whose charges make up about two-thirds of the monthly bill.
(Peco still collects a distribution fee from all customers for using its wires,
regardless of who generates the electricity.)

Since rate caps were lifted, about 370,000 Peco customers have switched to
alternative suppliers. Some suppliers are currently ramping up marketing
campaigns to capture Peco customers, pointing out that their rates are
substantially less than Peco’s Oct. 1 rate of 11.14 cents per kilowatt-hour.

For instance, Constellation Energy Group Inc., a Maryland supplier, is
currently offering a 12-month fixed price of 9.98 cents per kilowatt-hour, which
it advertises is about 10 percent less than Peco’s price.

But customers who opt for Constellation’s fixed-rate contract could find they
will be paying slightly more than Peco customers after Jan. 1, when
Peco’s rate is projected to drop to 9.91 cents per kilowatt-hour.

Peco’s impending price decrease will create new challenges for suppliers as
they set their prices for next year, said Jossi Fritz-Mauer, codirector of the
Energy Cooperative of Pennsylvania, whose current rate is greater than Peco’s
projected price in January.

“The Energy Cooperative is still in the process of finalizing our prices for
2012, but this certainly presents a new dynamic for Peco customers looking to
shop,” said Fritz-Mauer.

Jennifer Kocher, the spokeswoman for the Pennsylvania Public Utility
Commission, said that customers were becoming increasingly sophisticated as the
markets mature and that more were switching in response to price changes.

She said the PUC advises customers contemplating a switch to compare prices
at the commission’s website.

“We would hope that anybody who is shopping would do their due diligence,”
she said.

Irwin “Sonny” Popowsky, Pennsylvania’s consumer advocate, said the price
fluctuations underscored the risks and rewards of locking into fixed-rate
contracts when market rates are high or low.

“Some suppliers are able to beat Peco’s rate, but perhaps not as much as they
did a year ago,” he said.

Indeed, Peco customers who locked in last December with suppliers offering
12-month fixed-rate deals of 8.89 cents per kilowatt-hour are currently paying
20 percent less than customers who stayed with the utility. For a customer using
500 kilowatt-hours a month, the monthly savings amount to about $11.20.

Not every Peco customer benefits by switching to an alternative supplier.

Alternative suppliers are still unable to beat the utility’s discounted rates
for about 160,000 residential heating customers and 80,000 customers with
electric water heaters, said Engel Menendez.

But those below-market rates are scheduled to be eliminated at the end of
2012, and the utility expects suppliers to begin courting those customers at the
end of next year.

Read more: http://www.philly.com/philly/business/20111011_Peco_predicts_a_drop_in_electric-power_price.html#ixzz1aUmhf6Ky

Watch
sports videos you won’t find anywhere else

As posted on Peco Website

 

   

Customer Education

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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.
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.

As reported by David Fein  Post-Gazette

For nearly a decade, Pennsylvanians paid the same rate for electricity with no increase in price to account for inflation and global increases in commodity prices. No other commodity in Pennsylvania was price-fixed this way. Not natural gas or heating oil or water.

Yet for some reason, the end of electricity rate caps in Pennsylvania was predicted to be the apocalypse for businesses. But Jan. 1, 2010, came and went, and doomsday never arrived.

In fact, Pennsylvania has a good story to tell when you look back at the first quarter of electric competition in the PPL Corp. service area and look ahead to the opening of the Allegheny/West Penn market locally in 2011.

No less than 27 power providers are competing to serve residents, businesses, schools, universities, hospitals and units of local government where PPL used to have sole purview — and such competition can mean lower rates for customers. As a result, in only three months, 363,000 residential users opted for a new company to deliver their electric needs.

PPL estimates that 55 percent of large industrial users have taken advantage of the competitive marketplace and switched to other suppliers, as well. As important, this doesn’t include the businesses that have weighed their options and exercised their choice to stay with PPL.

After only one quarter in an open electricity market, it’s already clear the entrepreneurial spirit of Pennsylvania is alive and well. Businesses, universities and local governments are making smart decisions that not only help their bottom line, but that also provide stability across several industry sectors during an uncertain time in our national economy.

That level of performance reveals how Pennsylvania is well on its way to having one of the most successful competitive markets in the nation.

States from Texas to New York have opened their electric markets to retail competition but none had shown such immediate and dramatic results. Pennsylvania’s numbers will continue to grow as more businesses and other customers explore an open and competitive market — and as new marketplaces open on Jan. 1 for customers in areas serviced by Allegheny Power, Metropolitan Edison, PECO and Penelec.

While it’s early to forecast savings for Pennsylvania’s electricity customers, we can look to the experience of states like Illinois that have had competitive electricity markets for more than a decade. Over that period it is estimated that retail customers saved in excess of $1 billion. Pennsylvania has made the right decision for the long term.

Competition also has bred the development of new products and services not typically found in closed, monopoly-regulated markets. Today’s market opens the door to new possibilities for businesses to embrace environmentally friendly and cost-effective alternative energy sources such as wind or solar energy.

For example, the Harrisburg Regional Chamber and Capital Region Economic Development Corp. did something many would have thought impossible a few short years ago; it purchased wind energy certificates to power its Business Expo.

New energy companies in the PPL market also are challenging each other on new technological fronts to provide savings for their customers. Businesses no longer have to wait for monthly electric bills to set energy budgets; they can monitor their energy usage on more frequent intervals. This gives businesses the opportunity to plan ahead as to how they use energy, depending on what it costs at any given time.

Energy companies vying for business in a competitive, open marketplace foster innovation and new technology. In time, as customers become more sophisticated in exploiting the power of competition, they will demand greater innovation and specialized services from electric suppliers, and new products and services will be developed that provide greater control over energy usage and how that energy is generated.

The development of competition helps families and businesses control energy costs and allow units of government to preserve ever-shrinking resources. Such possibilities would never have developed under the old regulatory system.

Pennsylvania policy makers have developed a well-structured environment for competition to flourish — which will bring many benefits to Pennsylvanians for years to come.

Our Perspective:

The deregulated market offers great opportunities for savings for those companies that are paying more than $3000 a month for electric. HBS has clients in the PPL territory that are saving over 20%.

Granted the cost may be higher than what you have paid in the past 12 months, but when PA lifted their rate cap in Jan 2010, prices jumped.

The current PPL price to compare is arond $.105 cents per kwh. Depending on your usage patterns and cuurent market conditions, we were able to lock our clients in the $.082 to $.086 cent range.

Starting in January 2011, Peco customers will be joining the deregulated market. For commercial clients, Peco will be making 4 purchases from Sept 2009 to sept 2010. They have completed 3 of the 4 purchases and will be releasing a price to compare shortly.

For more information on saving in the deregulated utility market in PA email george@hbsadvantage.com