There are now over 100 new electric generation suppliers competing to serve Pennsylvania's business customers, but while this competition can drastically lower Pennsylvanians' electric bills, customers need to be sure that they find a reputable and competent energy provider that will be around for the long haul.
The risks from choosing the wrong electric supplier are not just hypothetical. In other markets where electric competition has allowed customers to save money on their electric bills, there have been energy suppliers that have gone out of business, as can be expected in any market where competition is driving down prices and margins, and only the strong survive.
Pennsylvanians can not simply choose the lowest electric rate when shopping for an energy provider, tempting as that may be. While a low price is important, customers need to be assured that their electric company can honor that price, whether it be for a short-term contract, or up to 12, 24 or 36 months. If their energy supplier offers a low "teaser" rate, but can't stand behind it and goes out of business due to mismanagement or risky plays in the electric markets, customers could be stuck paying extremely high rates for "default" service, which is the safety net service customers are automatically pushed to if their electric supplier goes out of business. These default rates can be high and volatile, and for some large business customers, they can change every hour of the day, with changes in the wholesale electricity market. These "hourly" prices can spike as high as thousands of dollars -- or more than 10 times the normal price.
Businesses have been exposed to these punitive rates on several occasions in the competitive Texas electric market, particularly in 2008 when five electric providers defaulted and dropped customers to the safety net Provider of Last Resort, mainly due to poor risk management by the suppliers. Pennsylvania customers must protect themselves against such dangers. However, researching the 100 electric companies now competing in Pennsylvania would take hours and hours, adding up to weeks if not months. Moreover, getting a good handle on the competency and capability of each energy supplier in Pennsylvania is a daunting task, as the electric industry is extremely complicated and technical, with limited information available publicly.