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 is about to begin in Jan 2011 for customers in the Peco territory. If you already have not started looking at the deregulated savings opportunity, now is a great time to start.

Electric commodity prices are very competitve offerring great opportunities to fix your supply price and save on your purchasing of electric for the next 12 to 24 months.

Hutchinson Business Solutions (HBS) is an independent deregulated energy consultant. We have been providing deregulated savings to our clients for over 10 years.  HBS has strategic partnerships with all the major providers currently marketing to the PA electric market.

You may ask, why should we use an independent consultant when we can deal with the energy companies directly.  The value we bring is that we are able to shop the entire market, offering an apple to apples comparison of what your current price to compare is from your local provider vs the deregulated providers.

You must be careful when comparing prices; for not every providers are including all the cost to make a correct comparison.

When speaking to the various deregulated, you must ask if the  prices are fully loaded.

In order to deliver 100,000 kwh of electric, a provider must send 107,000 kwh of electric due to the loss in delivering the electric. This cost is included in your PECO / PPL price to compare. You must verify if this cost is also included in the deregulated provider price.

Also the Peco price to compare also includes PA gross receipt tax. This also must be included.

As you can see, there are several factors that must be included to make an objective decision as to the best value. This is the expertise that HBS brings to our clients. We allow our clients to do what they do best (run the day to day business), while we become your legs and do the project for you.

There are no additional fees for our services. We receive a small residual from our strategic deregulated providers during the term of the contract. All the providers choose to use independent energy consultants; for it allows them to be more competitive in the market prices. We are not paid a salary, do not share in any of their benefits. That way, you will find that many times our prices are more competitve.  We add the benefit of  being able to define which providers are the most competitive for your unique market usage and will show you the variances in pricing.

Should you like to know more about saving in the deregulated utility market email george@hbsadvantage.com
Read more: http://www.philly.com/philly/business/homepage/20100616_Peco_Energy_customers_at_seminar_on_electrical_deregulation.html#ixzz0wVg1QQ7q
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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.

 

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

Some more information about prices and rates.

Beginning January 1, 2011, the prices PECO and our customers pay for electricity will be based on electric market pricing, after having been capped more than 10 years. Gas and electricity will cost customers more.

At the same time, the costs to operate our systems have been increasing. Because of these increased costs, PECO has requested Pennsylvania Public Utility Commission approval of its first electric delivery rate increase since 1989 and only the second natural gas delivery rate increase in 20 years. PECO is requesting an electric delivery rate increase of about 10 percent and a natural gas delivery rate increase of about 7 percent.

On May 20, 2010 the Pennsylvania Public Utility Commission formally suspended PECO’s request to increase electric and natural gas delivery rates. Part of the standard review process, PECO’s requested increases would have become effective on May 30 with no action by the PUC. The process now provides the opportunity to formalize a schedule of next steps including public hearings. Following these procedures, price changes will become effective beginning January 1, 2011.

Excerps from 

Press Release Source: PECO On Wednesday June 23, 2010, 5:35 pm EDT

PHILADELPHIA–(BUSINESS WIRE)–In preparation for the final transition to a competitive electric market in Pennsylvania, PECO recently completed the third of four planned electricity purchases to serve customers who have not chosen a competitive electric generation supplier beginning Jan. 1, 2011.

Beginning January 1, 2011, the prices PECO and our customers pay for electricity will be based on electric market pricing, after having been capped for more than 10 years. At the same time costs to operate our electric systems also have been increasing. The effect of all of these changes on PECO electric customers will be price increases of about 10 percent. For the typical residential electric customer, the increase is about $8 more per month.

The May 2010 purchases resulted in an energy price of 7.95 cents per kilowatt hour (kWh) for PECO’s residential customers. When combined with 2009 purchases, the May purchases result in a price of 8.91 cents per kWh for PECO’s residential customers, 8.66 cents per kWh for small commercial customers, and 8.63 cents per kWh for medium sized commercial customers.

Because energy prices fluctuate, PECO is buying the electricity needed to serve customers in 2011 at four different times – reducing the risk to customers of purchasing electricity all at one time when market prices could be high. PECO will complete the remaining purchases in September 2010. The results of all four purchases will determine the exact price PECO’s customers will pay for electricity beginning Jan. 1, 2011.

“We continue to be able to purchase electricity at lower wholesale market prices, helping reduce the prices for our customers,” said Denis O’Brien, PECO president and CEO. “And we have programs available to help customers use less energy and save money.”

Our Perspective:

Now we’re getting there. As Peco begins to release information, we will be better able to determine what opportunities for savings exist in the deregulated market.

All we will need is a copy of your latest invoice and a letter of authorization, which allows us to request annual usages on your account from Peco.

HBS is an independent energy management company. We have been providing deregulated savings to our clients for over 10 years. We represent all the major providers looking to sell electric in the Peco territory.

We will define the right provider at the the right price.

To learn more email george@hbsadvantage.com or call 856-857-1230 

As the electricity rate caps expire the Peco territory beginning in Jan 2011, now is the time to start learning more about how  your facility can benefit from the saving opportunities in the deregulated utility market.

PECO is conducting auctions on the wholesale energy markets to enable it to set tariff rates for its customers in 2011. Commercial clients fall into three categories: small (under 100 kW demand), medium (100 to 500 kW demand), and large (over 500 kW demand.)

 Demand information can be found on your electricity bills. For small and medium PECO customers, the final PECO tariff rates will be set this fall and will be in effect from January 1, 2011 to May 31, 2012. Large commercial customers’ rates will be set based on a Spring 2010 auction. These rates will be set for one year, beginning January 1, 2011.

Now is the time to seek competitive supply options for your business. You need unbiased, up-to-date information. Do not be rushed or feel compelled to choose any solution until you have all the market facts. A well-reasoned business decision that fits your specific business’s needs is the goal.

Hutchinson Business Solutions (HBS) is an independent energy management consultant. We have been providing deregulated saving solutions in both the natural gas and electric market for over 10 years.We have strategic partnerships with all the major providers selling electricity in Pennsylvania.

Currently, Peco is buying electric on the wholesale market and billing their clients at retail prices. HBS puts their clients in the wholesale position. There are no up upfront cost and all the savings fall to the bottom line.

To get started all we will need is a copy of your latest provider invoice along with a signed letter of authorization which will allow us to request the annual usage on your account(s) over the last 12 months.

Working on behalf of our clients, HBS will define which providers are best suited to both service your account(s) and provide the most competitive pricing.

For more information email george@hbsadvantage.com or call 856-857-1230

Let the savings begin!!!

Peco: What’s Happening

June 15, 2010

From Peco Website

In a word, deregulation.

Deregulation has transformed utilities like PECO from a company that makes electricity and delivers it to our customers, to a company that now purchases electricity from electric generators and delivers it to customers through our neighborhood poles and wires.

It may surprise you to learn that for the last decade, electricity prices have been capped to protect customers economically through a time when deregulation changed the utility business. During this period, prices remained set, regardless of what prices were doing in the marketplace.

The rate caps will come to an end. Beginning January 1, 2011, the prices PECO and our customers pay for electricity will be based on electric market pricing. We have a sound strategy for purchasing power for you. Currently, we are buying power at several different times and in a variety of ways to get the best possible prices.

At the same time costs to operate our electric and natural gas systems also have been increasing. So the bottom line for customers (and for PECO) is gas and electricity will cost more.

To learn more about how Deregulation will effect your electric bill email george@hbsadvantage.com or call 856-857-1230

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.