Residential and small business electric customers in Pennsylvania will soon see changes in how contracts are presented to them by electric generation suppliers, who compete to offer customers electric rates lower than the utility.

The Pennsylvania Public Utility Commission (PUC) has adopted a series of changes to make customer contracts for such "small volume" customers more transparent, and to make it easier for customers to understand what their contract price means.

Specifically, the Pennsylvania PUC has adopted a new definition for a "fixed price" electric contract. A fixed price contract in Pennsylvania for residential and small commercial customers must now maintain the same fixed price throughout its term length, regardless of changes in law or regulation.

To date, "fixed price" contracts in Pennsylvania could include "pass-throughs" of certain charges but could still be called fixed price.  While most suppliers limited the pass-throughs to insignificant charges that they had no control over and were only billed to the supplier by the federal government or regional transmission operator, other suppliers used "pass-through" clauses in fixed price contracts to change significant components of the customer's electric rate -- such as "capacity."  That made it hard to compare electric rates on an "apples to apples" basis, and disturbed customers' confidence in their shopping decision, as customers who thought that they had signed up for a "fixed" price were later seeing their rate change.

The PUC has said that pass-throughs will no longer be allowed on fixed price electricity contracts for residential and small business (under 25 kW) customers.  This means that when a residential or small business customer signs up for a fixed price electricity contract in Pennsylvania, they will be assured that the price will not change.

If a change in law or regulation imposes new costs on the electric supplier (an example would be a carbon tax), the supplier may terminate the fixed price contact and seek to sign up the customer on a new contract.  However, if that happens, the customer will be free to choose whatever supplier they want, without penalty or termination fee, and the original supplier does not automatically keep the customer.

Any Pennsylvania small volume contract that does not meet this new definition of "fixed" will be defined as a variable price contract.

While the PUC's latest moves are helpful, the electric market is still cluttered and esoteric for many customers who have never shopped for electricity before. Demystify the electric shopping process by getting suppliers to compete head-to-head to offer you the lowest rate, with simple and easy comparisons.