New Peco pricing will end some discounts

Peco Energy Co. is ending several popular programs at the close of the year that will likely increase electric bills for thousands of customers.

As of Jan. 1, the utility will no longer offer a discounted rate for 171,000 electric-heating customers. It also is phasing out discounts for 78,000 customers whose electric water heaters are connected to separate meters that restrict use to off-peak periods.

In addition, the utility is ending its Peco Wind program, which allowed customers to buy some or all their electricity from wind generators.

The changes are being made with the blessing of the Pennsylvania Public Utility Commission, which wants distribution companies such as Peco to offer a basic default service for residential customers and leave more specialized offerings, such as renewable-power deals, to the growing market of competitive suppliers.

"As part of the final transition to market-based pricing, utilities statewide are required to move to a single price for generation supply for the electricity used by all residential customers," said Cathy Engel Menendez, Peco spokeswoman.

Though Peco has been warning customers about the impending changes - the discounts were already cut in half at the beginning of 2012 - it is prepared for fallout when customers get their bills early next year and discover their discounts have disappeared.

The hardest-hit customers will be those who heat with electricity, whose rate is listed on their bills as RH (residential heating). The RH discount is a vestige of the utility's efforts from decades past to promote all-electric developments.

RH customers, who use large amounts of power during the winter, will now pay the same rate for electricity as other residential customers.

But RH customers have options. A growing number of suppliers are targeting heating customers to get them to switch from Peco, said John C. Raisch, chief marketing officer of Alphabuyer.com, a Paoli group-buying company.

The Pennsylvania Office of Consumer Advocate lists 13 suppliers with offers for Peco's RH customers. Most are priced above the utility's Jan. 1 default rate of 8.69 cents per kilowatt hour (kWh).

Several suppliers are offering variable RH rates below Peco's price. Customers who choose a floating rate need to be vigilant about checking their monthly bills to make sure the supplier's charge remains competitive.

First Energy Solutions, a retail supplier that has been aggressively marketing to Peco customers, is offering a three-year fixed-rate plan to RH customers for 7.23 cents per kWh during the winter months - almost 17 percent less than Peco's default rate in January. An RH customer using 2,000 kWh a month in the winter would save $29.20 a month.

The First Energy offer comes with conditions. The rate is slightly higher during summer - 7.39 cents per kWh. It also includes a $100 fee for customers who cancel before the term ends in October 2015.

The company is affiliated with FirstEnergy Corp., which owns 10 utilities, including four in Pennsylvania. It owns a lot of coal-fired power plants, too, which may not appeal to customers who want to buy their electricity from a "green" producer.

FirstEnergy also is offering a seven-year fixed rate of 7.5 cents per kWh to regular residential electricity customers that comes with a $300 early-cancellation fee. The price is fixed through July 2019.

The PUC lists current rate offers on its website, www.papowerswitch.com. The consumer advocate also lists prices on its website, www.oca.state.pa.us, and will mail the list to those who call 1-800-684-6560.

Every electric-heating customer still will receive a discounted distribution charge - that's the fee Peco assesses all customers for delivering the electricity over their wires, regardless of who supplies power to the customer.

Customers who have received Peco's off-peak discounted rate - the OP rate - for their electric water heaters have no other options. No competitive suppliers are matching the old OP rates.

Peco will assess a $1.75-a-month charge for the second meters, but the devices will no longer have functioning switches to cut off electricity during peak hours, and the customers will no longer receive discounts, said Ben Armstrong, a Peco spokesman.

Customers can hire electricians to remove the superfluous meters to avoid the additional charge, he said.

Those enrolled in the expiring Peco Wind program have a number of other options to keep buying "green." About 15 competitive suppliers are offering renewable-energy plans that derive some or all of their power from wind, solar, or hydroelectric projects.

In September, Community Energy Inc., the Radnor firm that pioneered the wind program for Peco, became a licensed retail supplier and is now directly marketing 100 percent renewable power to Peco customers. Community Energy says all its power is derived from Pennsylvania sources.

"We've signed up a good number of customers," said Jay Carlis, a Community Energy vice president. But he is concerned some Peco Wind customers will neglect to shop around for new suppliers and will revert to the utility's default rate.

"They're going to lose their clean energy if they don't take action," Carlis said. "It will go back to their brown power."

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

The Pennsylvania Office of Consumer Advocate will mail a free shopping guide from any utility: 1-800-684-6560.

Peco Energy Co. explains everything at http://www.peco.com/KNOW

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