Last week we told you about the phenomenal savings Pennsylvanians at PPL Electric are seeing on their electric bills from shopping for a lower electric rate and choosing a new energy provider, known as an electric generation supplier (EGS) in Pennsylvania. These same savings will soon be available to the remaining parts of the state that haven't had viable electric competition until now, including the metro Philadelphia area in the PECO Energy service territory. Customers can shop for these lower rates by pitting competing energy suppliers head-to-head to win your business.
But what happens if you don't shop for an alternative energy supplier? Starting January 1, 2011, the rate caps which have kept Pennsylvania electric rates low will come off, and customers not shopping for a lower rate will be exposed to new utility rates that are projected to increase sharply due to 15 years of rising costs in the energy industry. If customers don't shop for a new energy company, and remain with their utility, they will end up paying these higher prices.
How much energy prices will rise starting January 1, 2011 at the remaining rate-capped utilities in Pennsylvania is still uncertain as the utilities are still buying their electric supplies for the 2011 period. These four utilities are PECO, Met-Ed, Penelec, and West Penn Power (Allegheny). The expected rate increases vary by utility and by your customer class, but what is a sure thing, based on the PPL experience, is that competing energy providers are going to be able to come in and beat the utility's price -- but you have to shop around to see these savings.
For residential customers, the projected increases in power rates starting January 1, 2011 are up to 26.4% at Met-Ed and 20% at Penelec, with a statewide average of a 10% increase. Small and mid-sized businesses can expect similar rate hikes, with Met-Ed again being one of the utilities expecting to see the highest increase at nearly 25%, while the hike is forecast at nearly 15% at Penelec. Large industrial customers at Met-Ed and Penelec can both expect increases of 20% starting January 1, 2011, with the additional caveat that these customers may be moved to volatile "hourly" rates for electricity, which can spike during the peak hours at five or even 10 times the normal price.
At PECO in the Philadelphia region, the story is a bit different, but the end result is the same: customers can save big money by shopping for a lower electric rate. Because PECO's rates are currently so high, and given the recession's impact on power prices, customers at PECO may see a modest decrease in electric rates starting January 1, 2011, depending on where wholesale prices go between now at January. It's important to note, however, the if PECO buys its remaining power needs for 2011 at the same price it paid for part of its supplies last fall, residential customers will actually see a 4% increase in rates, while commercial customers won't see any savings, or any increase.
Therefore, customers should not be content to stick with PECO's default supply service, because lower rates are available by shopping for a competitive electric company. While customers who remain with PECO may ultimately see minimal savings, again depending on the price PECO pays for the rest of its power, customers who shop for lower electric power may see savings of 20% or up to 30% depending on their rate class and usage. Switching to a new energy provider will let customers take greater advantage of the current lows in wholesale power prices, and benefit from the savings that result when electric companies compete head-to-head for their business. Customers not shopping for a lower electric rate at PECO will be leaving money on the table, perhaps as much as hundreds of dollars per year for residential customers, and thousands or millions of dollars for businesses using more electricity.