If the experience at PPL Electric Utilities is any indication, the majority of Pennsylvania electric customers at PECO, Met-Ed, Penelec, and West Penn Power (Allegheny) are not aware that they are facing electric rate hikes in the neighborhood of 30% starting January 1, 2011 when rate caps expire.
Even though the likely rate hikes are just some five months away, many customers aren't educated about the state's competitive electric market and their ability to choose a lower electric rate.
That's the conclusion in a recent report from Pennsylvania's Auditor General Jack Wagner, who said that more education is needed to ensure electric customers don't pay the steep rate hikes when January comes. Customers can avoid these rate hikes by shopping for a lower priced energy provider, but many customers are unaware of this new right.
The Auditor General examined the experience of the removal of rate caps at PPL, where rate caps ended December 31, 2009, in concluding that most customers are unaware of the looming rate hikes. Specifically, the Auditor General found that as of September 30, 2009, just three months before customers at PPL were to see electric rate hikes of 30%, only 57% of customers were aware of when rate caps would expire.
While news coverage, and likely consumer awareness, of the expiring rate caps accelerated in November and December 2009, such increased awareness may have been too late to keep customers from taking a hit in the wallet.
That's because switching your energy supplier in Pennsylvania is a process than can take six to eight weeks, because switches must occur on a regularly scheduled meter read which only occurs once a month. That means if customers wait until the last minute to shop for a lower electric rate, they may "miss" being switched to their new energy provider in time to avoid the rate hike.
Put another way, a customer choosing a new electric company in December 2010 hoping to avoid rate shock at PECO or another utility on January 1, 2011 is very unlikely to have their switch executed in time, and will end up paying at least one month of the higher utility rates before their switch to a lower cost supplier takes effect 6-8 weeks later in January or February.
That's why Pennsylvania electric customers have to be shopping for a lower electric rate now, so they can ensure their switch takes effect before rate hikes occur.
The best news for Pennsylvania customers is that electric rates right now are at lows not seen in several years, making it the perfect time to shop. If customers set up a "forward contract" for their energy purchases, they can buy power at today's low rates, for delivery starting January 1, 2011 when rate caps expire. This forward contracting allows customers to find a low cost energy supplier well before rate caps expire so the switch can be timed to occur precisely when the rate caps end, but still allows customers to benefit from their capped electric rates until deliveries under the forward contract begin, giving customers the best of both worlds.