Many PPL customers switch to discounters
Facing steep electricity-rate increases on Jan. 1, nearly 117,000 PPL Electric Utilities customers have opted to switch to discount suppliers in the state's fastest-growing competitive power market.
Facing steep electricity-rate increases on Jan. 1, nearly 117,000 PPL Electric Utilities customers have opted to switch to discount suppliers in the state's fastest-growing competitive power market.
More than 8 percent of PPL Electric's 1.4 million customers have chosen to buy power from alternative suppliers, said Ryan Hill, a PPL spokesman. That includes nearly 100,000 residential customers.
The Allentown utility expects many more will shop around once they receive their bills early next year and the shock of a planned 30-percent rate increase sets in.
Already, the Pennsylvania Public Utility Commission has licensed five retail power suppliers to sell power to PPL residential customers, and they are offering discounts of about 10 percent from the PPL rate that will start on Jan. 1. More suppliers are expected to enter the market soon, state officials say.
"This is a golden opportunity for these competitors to come in and make offers 10 to 15 percent below PPL's default price," said James H. Cawley, chairman of the PUC.
The rate increase and competition are the consequences of the end of state-mandated rate caps in the utility's territory, including parts of Bucks, Montgomery and Chester Counties.
Under the Electricity Generation Choice and Competition Act of 1997, utilities like PPL Electric became distributors that merely deliver electricity to customers from power generators. The utilities' rates were capped at 1996 levels to allow them to ease the transition to competitive markets.
The PPL case is turning into a major boost for electric competition in the state. PPL customers represent about a quarter of the state's regulated electric customers. Rate caps will remain in place for most Pennsylvanians, including Peco Energy Co.'s 1.6 million customers, through the end of 2010.
In the competitive marketplace, customers can shop around for a company that generates power. But PPL is required to offer a default rate for those who stay. PPL's default rate of 10.45 cents per kilowatt hour is based on the average price it received from suppliers in a series of auctions in the last three years.
But wholesale electric prices have come down in the last year, and alternative suppliers are able to offer rates ranging from 9.38 cents to 9.52 cents per kilowatt hour for customers who sign up for a year. A customer using 1,000 kilowatt hours a month would save about $120 a year.
PPL says it is indifferent to who generates the power because it is obliged to pass the cost through to customers without a markup. "We don't compete with the generation companies," Hill said. "It's not going to hurt or help PPL Electric utilities either way."
Customers who opt for a new supplier are not getting a complete divorce from PPL Electric. The utility will still collect a fee of about 3 cents a kilowatt hour for distributing the power to each customer through its wires. PPL is still responsible for billing customers, collections and providing service.
PPL Electric's territory stretches from the New York border to the Maryland line and includes Harrisburg, Lancaster, Scranton, Williamsport and the Lehigh Valley.
A comparison of the suppliers and their rates is available from the Pennsylvania Office of Consumer Advocate: