Pennsylvanians catching on to choosing low-price suppliers for electric power
Pennsylvania mailboxes are stuffed with offers from utility companies with one message: You better shop around.
The state's recently opened market for electric supply has invited new players hoping to convince homeowners and businesses to compare prices when it comes to electric generation. And, according to a new report, a substantial amount of residential customers have taken up the recent offers.
A competitive utility market is still relatively new to Pennsylvania, but nationwide almost one-fifth of all kilowatt hours used in 2011 were purchased under a retail choice program, according to a report released Tuesday by the Compete Coalition, a consortium of electricity industry players. The report tapped data from Dnv Kema Energy & Sustainability, an energy consulting firm with U.S. headquarters in Burlington, Mass.
It offers the first comprehensive look at electric retail adoption since Pennsylvania market caps were lifted in 2010.
The simplest way to understand electric generational sales is to think of your electricity bill in two parts: generation and distribution. Distribution is handled by a utility company, which delivers electricity to the home or business that pays the bill. Where that electricity originates is the generation part.
If you do switch electricity suppliers, your bill will still come from the same utility company. The only difference will be on the line item that lists the supply charge. On sites like PAPowerSwitch.com, you can enter a ZIP code and see what offers are available in that area.
The pricing on offers varies, and some deals come with lock-in agreements that set a rate for months or years at a time.
Among Pennsylvania utilities, about one-fourth of Duquesne Light customers are shopping for different generation providers. More than 20 percent of Peco's residential load followed suit.
And residential customers in the three FirstEnergy Corp. service areas changed their generation providers to varying degrees.
In 2011, about 20 percent of Penn Power customers across northwestern Pennsylvania switched. Just more than 11 percent of West Penn customers across western and central Pennsylvania and 4.3 percent of Penelec customers across central and northern Pennsylvania did the same.
PPL of Allentown has seen the greatest adoption rate so far in the state, with 45 percent of its residential base switching.
The retail format is currently available in 18 states that account for 44 percent of America's total electric load.
Since 2008, the number of residential accounts served by competitive suppliers has increased by more than 54 percent to nearly 11 million accounts. Non-residential accounts, which would include commercial and industrial clients, have increased by more than 800,000 to hit 2.4 million.
Of course, it's easy to see significant adoption rates when new states have deregulated their markets. Mr. O'Connor said he expects adoption nationwide to continue at a steady rate for several years, and predicted it might plateau in about five years, when about 70 percent of all kilowatt hours will be purchased in a choice marketplace.
Similar markets are found in Australia and England. Japan is expected to introduce a more deregulated generation market as that country's government tries to rebuild an energy infrastructure still reeling from the nuclear power plant meltdown and criticized government response at the Fukushima Daiichi plants in 2011, said Mr. O'Connor.
If Pennsylvania follows the precedents set by other states, it should see the percentage of residents switching increase over the next several years, said Mr. O'Connor. Adoption typically begins with business and residents in major metropolitan parts of the state, and then filters out to the suburbs and rural areas, he said.
There are some parallels to the telecommunications industry, which was deregulated in the 1980s and introduced residents to options far beyond the landline that came with a house, said Mr. O'Connor.
Now, a single home can have individual companies providing long-distance and local services. Multiple cell phone carriers can be represented under one roof, and landlines themselves have become increasingly obsolete as the market moves toward mobile-only users, said Mr. O'Connor.
The utility parallel that he envisions sounds more like a leftover script from, "The Jetsons."
"Every appliance in your home will have a chip that you're able to program to reduce consumption if prices rise to a certain level," he said.
One application of that he offered would be particularly useful during the unpredictable weather seen in Pittsburgh this year. If electric prices go up, an air conditioner could turn itself down so it uses less energy and costs less money.
First Published April 4, 2012 6:30 pm