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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 As reported by Pennsylvania PUC

Electric customers in Pennsylvania were among the very first in the United States to have the ability to choose the company that supplies their electricity. You may be able to choose your electric generation supplier (EGS) in areas where competitive electricity supplies are being offered. Consumers may be able to secure supply rates below the prices offered by their utility. Generation supply costs comprise the majority of the average electric bill. Consumers are encouraged to proactively engage competitive suppliers – whose price is unregulated by the Pennsylvania Public Utility Commission (PUC) – to obtain pricing information for the generation portion of their bill. Competitive offers may not be available in all areas.

The PUC has engaged consumer advocates and industry experts in efforts to mitigate any price increases in future electric generation prices. The PUC has been working to educate consumers; develop strategies to remove barriers for suppliers providing competitive electric service; approve phase-in or pre-payment plans and direct all utilities to file such programs if electric rates increase by more than 25 percent; update low-income programs that provide customer assistance; and implement default service pricing that reflects the least cost to consumers over the long term. We also are continuing to implement reasonable, cost-effective programs that consumers and companies can implement to conserve energy or use it more efficiently.

Why are there rate caps, and why are they expiring?

Under the 1997 Electricity Generation Choice and Competition Act, electric rates – which are comprised of generation, transmission, and distribution – were capped to ease the transition to competitive markets.

The 1997 law allowed residential customers to have direct access to and purchase power from independent EGSs, while still having their electricity physically delivered by electric distribution companies (EDCs) regulated by the PUC. The law also permitted the EDCs to recover “stranded costs.” Stranded costs include investments in infrastructure made before the law was passed that may have become uneconomic and unrecoverable in a competitive environment. With limited exceptions, once rate caps expire, the companies can no longer collect for stranded costs.

In exchange for the recovery of stranded costs, generation, transmission and distribution rates were capped at 1996 levels. The caps on transmission and distribution rates all have expired. After litigated proceedings before the PUC, the generation rates were extended for many of the electric companies. As determined by those proceedings, all utility rate caps will expire by Jan. 1, 2011.

 

Caps 

Company

 

 

Generation Rate Cap Status

 

 

% of PA Ratepayers

 

 

Citizens Electric Co.

 

 

Expired

 

 

0.1

 

 

Duquesne Light Co.

 

 

Expired

 

 

10.6

 

 

Pennsylvania Power Co.

 

 

Expired

 

 

2.8

 

 

Pike County Light & Power Co.

 

 

Expired

 

 

0.1

 

 

UGI Utilities Inc.

 

 

Expired

 

 

1.1

 

 

Wellsboro Electric Co.

 

 

Expired

 

 

0.1

 

 

PPL Electric Utilities Inc.

 

 

Expired

 

 

24.6

 

 

Metropolitan-Edison Co.

 

 

Dec. 31, 2010

 

 

9.5

 

 

Pennsylvania Electric Co.

 

 

Dec. 31, 2010

 

 

10.6

 

 

PECO Energy Co.

 

 

Dec. 31, 2010

 

 

27.8

 

 

West Penn Power Co.

 

 

Dec. 31, 2010

 

 

12.7

 

 

 
 

What will happen once the generation rate caps expire?

The PUC expects that customers may see an increase in their bills after the expiration of rate caps. While Pennsylvania consumers’ rates have been capped, the market prices for electricity have risen. The magnitude of those increases will depend upon market prices when the EDC acquires its power.

Do I have to pay what the EDC is charging for electric generation (default service)?

Customers do not have to pay the EDC prices. They will have the ability to choose between an EDC and competitive supply prices for the generation portion of the bill. An EGS may be able to offer a better price for the generation. Customers will be able to compare the EDC price to a competitive supplier price to find the best option.

The amount you might save depends on issues such as:

• How much you pay now for electric generation supply;

• How much electricity you use;

• How market prices change in the future;

• What products and service are included in the EGS price such as renewable energy produces or other demand side and conservation services; and

• The price offered by the suppliers serving your area.

Who can take part in Electric Choice?

Every electric customer has the option to take part in electric choice, pending the availability of competitive suppliers in the service territory. As of January 2009, the Commission licensed more than 45 EGSs. While the Commission may license an EGS, it cannot force the EGS to offer services.

Can I save money by choosing a competitive supplier?

In the territories where rate caps already have expired, an increase in the number of EGSs offering services to residential customers has occurred. In some areas, the EGSs rate is as much as 10 percent cheaper than the default service price offered by the utility. An EGS may be willing to negotiate on price or other services to entice you into switching suppliers. The Office of Consumer Advocate offers consumers a direct comparison of the utility prices versus the supplier price. You can view the “Price to Compare” at http://www.oca.state.pa.us.

Remember, regardless of who generates your electricity, you will still continue to call your EDC for emergency services and questions regarding your residential service including outages. The quality, reliability, and maintenance of your electric service should not change as it is still monitored by the Commission. However, if you have a question about your generation charges you should first call your EGS.

If I choose a new EGS, can I change my mind and choose another EGS?

Yes. However, you should carefully check the terms of the agreement with the EGS, especially for length of contract and any penalty clauses.

I participated in a pre-pay program with my utility, but would like to choose another supplier. What happens to my money?

The money that you deposited in a pre-pay plan and any interest will be applied to your account, no matter who supplies your electricity.

For further information, contact the Public Utility Commission:

Call

1-800-692-7380

For people with speech or hearing loss, dial 7-1-1 (Telecommunications Relay Service)

Write

PA Public Utility Commission

Bureau of Consumer Services

P.O. Box 3265

Harrisburg, PA 17105-3265

Visit our website

January 2010

 

 

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

Would you intentionally overpay for your phone service… monthly rent… or maybe a new car?

Of course not…

Then why would you overpay for your natural gas or electric bills?

Lower Rates… For the first time in the last 4 years deregulated natural gas and electric prices are lower than the local provider charges.

You now have a choice and can choose lower energy rates without any risk or local service change. No-Hassle!

Your local providers buy natural gas and electric on the open market at wholesale prices and then bill their customers at retail prices.

We put our clints in a wholesale position.

If you are a business spending a minimum of $3000 a month a piece on your electric or natural gas, you may qualify for deregulated savings.

We conduct a no-hassle evaluation. There is no-risk and there is no-cost. We simply find you the best rates available.

All we need is a copy of your latest provider invoice.

Start Saving and join thousands of happy customers who have already lowered their energy bills!

Makes Sense!

Why Overpay?

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