For commercial customers, Peco will raise its price to compare

Peco Energy Co.'s commercial customers who have not shopped for an alternative electric supplier might want to reconsider that strategy.

The Philadelphia utility announced Tuesday that its electricity prices for commercial customers would increase between 9.4 percent and 12.6 percent on July 1.

Peco's commodity charge, which accounts for about two-thirds of a typical customer's bill, will increase sharply to reflect the higher price of procuring power during the summer months, said Cathy Engel Menendez, the utility's spokeswoman.

The increase won't affect the 60,000 Peco small commercial customers who have switched electrical suppliers in Pennsylvania's deregulated energy markets.

But nearly 100,000 shop owners, office managers, and manufacturers that have not switched from Peco might take a second look at alternatives in the face of the impending increase.

For small commercial customers, Peco's price to compare will increase from 9.43 cents per kilowatt hour to 10.32 cents on July 1, a 9.4 percent increase.

For medium commercial customers, the rate will increase from 9.30 cents per kWh to 10.47 cents, or 12.6 percent.

According to Peco, the average monthly usage for general-service commercial customers - the GS Rate - is 4,530 kilowatt-hours, or about $565 a month.

A typical small business customer will see a monthly increase of $40 on July 1.

Peco had previously announced that residential charges would be increasing by 4.3 percent on July 1. On Tuesday, Peco was more specific, saying its residential price-to-compare will increase from 9.99 cents to 10.42 cents. For consumption above 500 kilowatt-hours, the price will be 11.69 cents per kWh.

Peco says that the commodity prices are based on procurement contracts with power generators, and that the utility passes the cost along to customers without markup. The supply contracts are based upon tightly structured market-based auctions.

Peco's commodity charge for commercial and industrial customers is more dependent upon short-term spot market electricity costs than the residential rate, which is protected from volatility by more long-term power-supply deals. So the commercial price can fluctuate more dramatically each quarter.

The wholesale cost of power has always varied seasonally. But with deregulation, Peco's charges are now adjusted quarterly to reflect market conditions. Electricity tends to be more expensive in the summer, when demand is higher.

The quarterly adjustments don't affect Peco's rate, a distribution charge assessed on each customer regardless of who supplies the electrical power. The distribution charge reflects Peco's cost for maintaining its wires and customer service system, and it includes Peco's profit. That fixed rate is regulated by the Public Utility Commission.

While most suppliers advertise a uniform rate for residential customers, commercial customers have fewer guideposts. Suppliers often quote individual prices that depend upon a customer's usage patterns.

One supplier that quotes a small-commercial rate is the Energy Cooperative Association of Philadelphia, whose rate may now be more attractive in light of Peco's increase.

The Energy Coop charges 9.42 cents per kilowatt-hour for small commercial customers, a supply that includes 20 percent renewable power. When Peco's rate goes up to 10.32 cents in July, the nonprofit's price will be 8.7 percent less than the utility's. That does not include the cooperative's $30 annual fee for commercial memberships.

Jossi Fritz-Mauer, codirector of the cooperative, said customers needed to initiate the switch now in order to take advantage of the savings this summer.

"If they wait for big bills to shock them into switching, they'll miss out on a lot of savings," he said.

Peco Energy Co. responds to customer questions

at www.pecoanswers.com

Pennsylvania's Public Utility Commission explains electrical choice and lists alternative suppliers at www.papowerswitch.com

The Pennsylvania Office of Consumer Advocate will mail

a Peco shopping guide for free: 1-800-684-6560.EndText