Electricity choice in the state of Pennsylvania has proved to be a success thus far. Pennsylvania phased in electricity choice by placing rate caps on all customers for a minimum of ten years when the state first entered deregulation in 1997. The rate caps, and expiration of those caps, was dependent on the incumbent utility of the customer.
Pennsylvania’s electricity regions are divided into seven major utilities: Allegheny Power, Duquesne Light, MetEd/Penelec, PECO Energy, Penn Power, PPL, and UGI. Due to increasing energy prices from 1998 to 2008, competitive suppliers were hesitant to enter these markets as they were unable to offer electricity rates that were lower than the capped rates. Now that all of the capped rates have been lifted, dozens of PA Electric Companies have entered these markets and offering electricity prices that are cheaper than the utility default rates.
The capped rates were lifted in the PPL region on January 1, 2010. One year later, in January 2011, 35.1 percent of the residential customers and 42.6 percent of the commercial customers have chosen a competitive electricity supplier. Without doubt, PPL has one of the most active electricity markets in the country, and is seeing an unprecedented switch activity resulting in lower electric bills for energy customers.
PECO energy, the largest utility in Pennsylvania, had their capped rates expire on January 1, 2011. PECO energy is also seeing tremendous activity with consumers taking the time to compare electricity offers and sign power contracts that are resulting in savings and price protection.
Much of the success in Pennsylvania is due to the state government educating their citizens on electric choice and the electricity competition act that was voted on over a decade ago. Similar savings energy savings opportunities are available in Pennsylvania’s neighboring state of New Jersey. However, the switch rate there, and the market entrance of competitive suppliers, has been much slower than PA.
New Jersey energy customers have not embraced electricity deregulation like Pennsylvania. They have focused their marketing efforts on Clean Energy initiatives which has caused a lot of confusion among consumers. Solar energy is going to be a very important source of energy for our planet in the future, but that future is still decades away. There are many small businesses and households in New Jersey who have not shopped for electric rates as they are holding out for solar panels that they are being told will be cheap and eliminate their electricity bill all together. In the mean time these customers are stuck paying high utility default rates that are 10 to 20 percent more than the competitive market rates.
As the number of participants in the Pennsylvania electricity market continues to increase, more energy suppliers will enter the market and more green energy options will naturally become available to consumers. Pennsylvania is taking a realistic approach to lower energy prices and green energy innovation by embracing electricity choice.
In the summer of 2011, PPL commercial rates increased by over 33% for customers who had not selected an alternative supplier. Competitive commercial electricity rates for these PPL business customers are available in the choice market that can provide electric bill savings of 20-40%.