On January 1, 2011, the last electric rate caps expired in Pennsylvania, signaling the completion of its transition to electric competition.
With landmark legislation in 1996, Pennsylvania became one of the first states to give customers an opportunity to choose their energy provider.
Pennsylvania's utilities sold their power plants to open the market to competition, and now only own the transmission and distribution wires, while also providing "backstop" power to customers who do not shop for electricity. With the move to competition, the utilities have separated service into two parts:
• Regulated distribution of power, which is still only provided by the utilities, and
• Supply of the electric commodity, which is open to competition.
Customers can choose to receive their electricity supply from their utility, or an alternate energy provider.
Customers who do not choose an alternate electric provider receive default service from the utility. In most parts of the state, including at PECO, PPL, and the FirstEnergy companies, the utilities buy default service power through competitive auctions.
While each utility buys its default service supply differently, they generally follow a similar pattern. Most power for residential and small business customers is bought through competitive auctions on a rotating basis, with a mix of long-term supply contracts and spot market purchases. This mixing of contracts is meant to mitigate power price volatility; however, it can add a risk premium to prices due to hedging power on a long-term basis. Additionally, since contracts have mixed lengths, any decreases in power prices won't be seen right away, because some higher price contracts will remain in effect. Customers can avoid the risk premium, and take advantage of falling prices faster, by choosing an alternative energy provider.
For larger businesses, default service supply is bought on the wholesale spot market, with prices changing hourly. The cutoff for this mandated hourly pricing for customers buying power from the utility varies, but is generally 500 kW and up, and in some cases as low as 300 kW and up. To avoid these volatile hourly prices, large businesses can contract for a flat price with an alternative energy provider.
Customers who choose an alternate energy provider still have their power delivered to them by their utility, and contact their utility for all outage reporting. Customers can choose to receive either a single bill from their utility for their delivery service and energy supply service, or can receive two bills, one from each company.
Natural Gas:
The Pennsylvania Public Utility Commission has reformed the natural gas industry to give customers a chance to shop for lower natural gas rates. Starting in 1999, the gas utilities started a process to open their service areas to allow customers to choose a different company to supply them with their gas supply. PECO, Columbia Gas, Peoples Gas, Equitable Gas, National Fuel Gas, Philadelphia Gas Works, UGI Central Penn Gas (PPL Gas), UGI Penn Natural Gas, UGI Utilities-Gas Division and TW Phillips Gas and Oil Co. currently offer gas choice. Customers choosing an alternate gas supplier will still have their gas supply delivered by the local utility, but customers will be buying their gas supply from a new company.
A customer's natural gas bill has been separated into two parts:
• Regulated distribution of gas, which is still only provided by the utility, and
• Supply of the gas commodity, which is open to competition.
Customers can choose to receive their gas supply from their utility, or an alternate gas provider.
If customers do not shop for an alternate gas supplier, they receive default supply service, or sales service, from their utility. Under default supply service, customers pay a supply charge composed a Purchased Gas Cost factor (reflecting the cost of the physical gas), a Gas Procurement Charge (reflecting administrative costs for the utility to buy gas supplies, e.g. overhead), and a Merchant Function Charge (reflecting the utility's uncollectible accounts associated with gas supply service).
Combined, these charges equal a "price to compare," which can be used as a benchmark to compare utility supply service and supply service from an alternate natural gas supplier. The various components of the utility supply charge can change throughout the year, meaning customers do not have price protection and can be exposed to volatile swings in monthly prices. Customers can avoid wild swings in the gas supply charge by contracting with an alternative gas supplier.
No matter who you choose to buy energy from, your local utility will continue to deliver your gas and respond to service interruptions and outages. You will still pay your utility for these services. Depending on your area, you can choose to receive a single bill from your utility listing your utility delivery charges and supply charges, or separate bills from the utility and alternate energy provider.
For outages or gas leaks please refer to the numbers below:
Allegheny Power 1-800-255-3443
Columbia Gas of PA 1-888-460-4332
Duquesne Light Company 1-412-393-7100
MetEd / West Penn Power 1-800-545-7741
Penelec 1-800-545-7741
Penn Power 1-800-720-3600
Pennsylvania Power and Light (PPL) 1-800-342-5775
Philadelphia Electric Company (PECO) 1-800-494-4000
UGI 1-800-276-2722