Background on Deregulation:
In the early 1990’s Pennsylvania’s electricity rates were 15% above the national average- an unusual situation considering the keystone state’s abundance of cheap coal. Unlike cable or Internet service you had no choice where your electricity came from- electricity was a state-run monopoly. This all changed in 1996 with the passage of the Electricity Generation and Customer Choice and Competition Act. The bill was intended to make electricity cheaper by allowing outside companies to compete with PPL, Duquesne Light, PECO, and the other 8 regional monopoly utilities. Fearful of price gouging legislators tweaked the deregulation bill. Instead of allowing full competition they placed rate caps (or price ceilings) on utilities and allowed them to collect a Competitive Transition Charge (CTC) from ratepayers, reducing the ability of alternative suppliers to compete and rendering deregulation unsuccessful for the most part.
What Now? What Does this Mean to me?
PA utility rate caps expire in 2011, which will cause PA's articifically low electricity prices to rise anywhere from 10% to over 50% (in some parts of the state.)
HOWEVER, the great news is that you can now choose the company that generates your electricity - also known as your electric supplier. This means you have the power to switch to a competing supplier who can offer the lowest price, or provide a specific service you want such as green/renewable energy.
Understanding the basic types of plans will help you to get the best bang for your buck. There are three types of electricity plans; fixed, variable, and time-of-day rates. With a fixed rate the price of electricity will remain the same throughout the contract. Not shopping will automatically place you on your current utilities fixed rate (an exception is large industry where the default rate is volatile hourly pricing).
A variable rate changes with the electricity market month to month. This plan takes advantage of price dips but can also result in short term price hikes.
Finally, Time-of-Use rates are based on normal daily price fluctuations. When there is a high demand for power, called peak hours, electricity costs more. With this type of plan, you can save money by concentrating your electricity use during low demand periods or outside of regular business hours. This form of pricing is ideal for consumers who can shift their electricity use with few consequences. A basic example is a resident who decides to do laundry in the evening instead of the middle of the day.
There is a fourth type of electricity plan where you can incorporate renewable energy. Each month an additional charge will be added to your monthly bill to support the use of more expensive renewable energy like wind and solar. This option is attractive for businesses and individuals who highly value being green. Renewable options did not exist under regulation and utility’s one-size-fits-all electricity plans.
Everyone’s electricity use is different but under regulation it was impossible to find an electricity plan tailored to their needs. With the onset of deregulation, alternative suppliers and consultants are now free to negotiate pricing options based on your tolerance for risk and ability to adjust energy usage according to market prices.
Resources:
http://www.papowerswitch.com/ (information from the PA Public Utilities Comission on the switch and what it means for you. FAQs are here: http://www.papowerswitch.com/frequently-asked-questions/
Type in your zipcode or fill out a form to see what is available in your area:
All Pennsylvania residents have the right to choose their electric supplier, but your ability to switch depends on where you live. Competitive offers may not be available in all areas.
This article is a reproduction of the one located here:
ReplyDeletehttp://www.electricchoice.com/electric/index.php/how-to-find-the-best-electricity-plan-in-pennsylvania/
I just thought I would cite the source for you.