When the Pennsylvania legislature approved electric competition 13 years ago, lawmakers imagined that one day most customers would shop around for the cheapest price or the best service - the way they now do with cell phone providers.
That hasn't happened.
In two parts of Western Pennsylvania, where market rates rule, for example, less than 20 percent of residential customers have opted for alternative suppliers, despite offers of discounts ranging from 7 percent to 10 percent.
Instead of choosing a power supplier that would save a typical Pennsylvania household about $100 a year, residential customers there seem to be saying that the savings just aren't worth the hassle of shopping.
"The idea was to give customers a choice," said James H. Cawley, chairman of the state Public Utility Commission. "You can only do so much, and if people don't help themselves, you can't make them."
But Cawley and others say they believe the climate might change dramatically in the next month as full competition is introduced to the vast territory in central and eastern Pennsylvania served by PPL Electric Utilities Corp., of Allentown, which has 1.4 million customers, nearly a quarter of the state's total.
Tomorrow, state-mandated caps will be lifted in PPL territory - which includes parts of Bucks, Montgomery, and Chester Counties - and rates will go up about 30 percent. Five suppliers are blanketing the territory with ads and direct-mail offers of discounts that would cut the amount of the increase about a third.
Already, nearly 148,000 customers, more than 10 percent, have signed up.
The experience in PPL territory will set the stage for the complete transition of Pennsylvania's regulated electric utilities to open competition at the end of 2010, when rate caps expire for five remaining utilities, including the biggest, Philadelphia's Peco Energy Co.
Power brokers are ramping up activity in the state now, with the aim of establishing a long-term presence. Cawley said he had talked to the electrical-generation suppliers, "and they think the Peco market is huge."
If the industry's experience in Western Pennsylvania is any indication, residential customers will be reluctant to embrace the change.
In areas served by Duquesne Light Co., of Pittsburgh, and Penn Power Co., of New Castle, Pa., where rate caps came off in recent years, only about one in five residential customers have switched suppliers - though a majority of commercial customers and nearly all industrial customers have.
"We and the utilities haven't done enough to educate customers," said Dan Donovan, spokesman for Dominion Retail, a nonregulated subsidiary of the Richmond, Va., energy company that markets in Pennsylvania.
Under the Electricity Generation Choice and Competition Act of 1997, utilities such as Peco and PPL Electric divested their power plants and became distributors that deliver electricity to customers. They earn profits only for the monopoly service they provide to all customers, such as billing and maintenance of distribution lines. Those charges are still regulated by the PUC.
Though the utilities are indifferent to which suppliers their customers choose, the PUC has ordered them to provide power to those customers who do not choose. A utility's rate, which is an average price of contracts from power suppliers who bid at auctions, is called the default rate.
PPL's default rate is 10.45 cents per kilowatt-hour, compared with prices of 9.38 cents to 9.52 cents per kilowatt-hour from alternative suppliers. The average Pennsylvania residential customer consumes 10,500 kilowatt-hours a year, so those pennies add up.
Donovan said many customers misunderstood the process of shopping for a generation supplier, whose charges typically make up about 70 percent of the total bill.
"It's painless," he said. "You still get one bill. It doesn't change anything."
Suppliers offering the best prices typically want customers to commit for at least a year. Some impose fees for early cancellation of the contract.
Cawley, the PUC chairman, said customers who did not switch often said they could not be bothered with shopping for savings of only $100 a year.
"That's not serious money?" he asked.
Many customers also fear that by choosing a supplier other than their present utility, they will be penalized with poor service.
"It's nonsense," Cawley said.
More information is available on the PUC's Web site: http://www.puc.state.pa.us/utilitychoice/. The Pennsylvania Office of Consumer Advocate also has compiled information on competiting offers: http://www.oca.state.pa.us.