Pennsylvania Electricity Deregulation – Weathering the Storm Part 2: Shopping for an Electricity Provider

Many of us are geared up for gift shopping as we rush through the holiday season and sprint to the end of the year. This year, however, the 2010 shopping spree gets a little more complicated. We need to add shopping for an electricity provider to our list.

The uncertainty and finding time to do that can be stressful, but times are changing, and a savvy approach to energy use can amount to big savings to the household budget. And quite frankly, picking an energy supplier is no more difficult than shopping online for a tie for great uncle Fred, unless he has already been scratched off the list in these penny-pinching days.

In my last column, Pennsylvania Electricity Deregulation – Weathering the Storm Part 1: How It Got Here and How it Works,” I focused on how the electricity gets to your home or business, and how deregulation, and the end of a decade of rate caps would change the way we all use electricity.

In Part 2, we’ll look at why starting January 1, 2010, PPL’s customers will see a 30 percent increase in their energy bills (Allegheny customers face the change in 2011), and then we’ll look at how to shop for a supplier that meets your needs.

WHY RATES GO UP IN 2010
Theoretically, deregulation creates a competitive marketplace where companies compete for your business. In turn, prices for the product or service are kept low by that very competition. That is what the PUC (Public Utility Commission) and state government set out to do when they deregulated electricity in 1996. The goal was to break up the monopoly of a few utilities, and give more suppliers access to Pennsylvania customers with the end result of affordable electricity. So why the PPL increase?

PPL (PPL Electric Utilities) does not produce power. It buys its supply through competitive bids on the open market. For the past three years, PPL has been buying energy as they are obligated to by the state and sell it to you and without making a profit.

When PPL was buying power for 2010, the energy costs were higher at the time. In fact, the rate increase would have been much higher than 30 percent had not some of the later auctions been cheaper than the earlier ones.

Some of the suppliers that now can enter Pennsylvania bought their supply when prices were down and thus can offer a discount to PPL’s rate. What happens after 2010 is anyone’s guess, but that is what occurs in a deregulated market; you will have to be a more involved consumer to stay on top of the price changes.

SHOPPING FOR ELECTRICITY
If for whatever reason you do not a sign up with another supplier, you will then stay with your current provider, like PPL or Allegheny. If you decide to shop around then where do you start?

In the past few weeks, as a residential PPL electric customer, you should have received a letter that included a list of suppliers. Most PPL customers also have been receiving information from PPL and other licensed providers about electricity purchasing opportunities.

First, if you need to better understand the system and deregulation, then visit my blog at http://hungryplanet-living.blogspot.com/. You can find Part 1 of this series and other links.

If you missed the mailed information or tossed it in the trash, then start with the online factsheet http://www.abe.psu.edu/extension/factsheets/h/H85.pdf by my colleague Dennis Buffington at the College of Ag Sciences. The factsheet offers shopping tips for residential, business and commercial customers. Worksheets to record the suppliers’ responses can be downloaded at the Cooperative Extension site, http://energy.cas.psu.edu/.

After arming yourself with the needed information and the worksheets, you need to visit PUC’s “Utility Choice” site, http://www.puc.state.pa.us/utilitychoice. I feel the “Utility Choice” site is one of the best organized state sites I have ever used. By going to the electric part of the site and clicking the supplier’s button, you will see a list of EDCs (distribution companies, utilities) that serve Pennsylvania customers. Click on your current utility, in this case PPL or Allegheny, and you will get a list of the licensed suppliers in the state. As of this writing, there are six suppliers for PPL residential and many more for the business customers. Allegheny Power Region has none at the moment for residential, but that will change next year as their own rate caps come off.

I know of two suppliers, Direct Energy and Dominion Energy Solutions, which have mailed out marketing pieces to PPL customers. Both offer a discount to the upcoming of PPL rate. The terms vary between the two companies. I have talked to Dominion’s corporate communications person and two of its customer service people, and I found them clear and precise on the plans they offer.

Generally the process is fairly simple. You can call or go online. Some plans have one year or longer contracts. Some have no contracts for 2010; you just sign up. Some plans let you leave early without paying penalties; others you pay a penalty. Some have one rate for the entire year; others have a lower rate for the first three months and then a slightly higher rate for the rest of the year.

Some plans are still in limbo while they wait for PUC approval. There are also plans for those interested in purchasing energy produced by an alternative source like wind energy.

Do your homework and ask questions about the rates, and if any contracts and penalties apply. It may seem confusing and time consuming, but it’s not once you dive in.

One important factor you need to remember is that whatever happens, you will always have a reliable source for electricity. By law, if your chosen supplier fails to provide you with electricity, then your “default supplier,” which for many is PPL, will provide you with power at its prevailing price.

You really have nothing to lose by making the effort, and the education and savings you’ll get are worth it. So get out there and start shopping.

Have a great holiday and an energy efficient New Year, and put great uncle Fred back on the list.

The next column in the series will be “Act 129 – The Brave New World of Electricity Distribution.”

Pennsylvania Electricity Deregulation – Weathering the Storm Part 1

In 1996, the Pennsylvania General Assembly approved the deregulation of electricity generation. When that event happened, it set the course of how you would use electricity and its cost. For PPL customers, deregulation begins January 1, 2010, and for Allegheny Power customers, it is January 1, 2011. But what does that mean for you? It probably means, according to most PPL officials, a 30 percent increase in their residential customers’ electric bills. Whoa…

PPL has an insert with its November bill that is offering a deferral option of spreading out the higher electricity costs.

“You defer some of the charges you would otherwise pay in 2010 and pay them back later, plus interest, on top of your full bill,” states the insert. That’s fine, but my question is do you really want to go down that road?

How can you brace for this approaching storm to your household budget? My upcoming series of articles will help guide you to the day of reckoning, but before we move forward we need a little history and background on deregulation.

Implemented by the Pennsylvania Public Utility Commission (PUC), electricity rate caps (price controls) were to stabilize prices during the upheaval leading to the complete deregulation of electricity generation. Except for the PUC-granted, minimal annual increases, electricity prices have changed little since 1996, as compared to, and this is important, other energy sources. Additionally, if you look at your bill, you will see monthly tangible and intangible transition fees, or stranded invest¬ment fees. Those have been used to compensate the utilities as they moved toward and into deregulation.

The primary reason to remove the rate caps was to open the electric industry to competition, thereby enabling PA residents, institutions, businesses, and industries to shop around and buy electricity at lower costs. Originally, the deregulation was to be completed statewide by January 1, 2001 with rural electric cooperatives and municipal-operated utility companies exempt from the legislation. That date was well-missed, which leaves us with the final drop dead dates on the horizon.

Theoretically, you could choose a supplier since 1996, when rates were capped. But in reality, other suppliers couldn’t compete with the big utilities’ artificially low rates, so they stayed out of the market. Now, with the rate caps coming off, companies that can beat the price of the current suppliers can begin making offers to PPL’s and other utilities’ customers.

To understand the deregulation of electricity generation, you need to know some of the following:

THE THREE PARTS OF PROVIDING ELECTRICITY TO YOU, THE CUSTOMER
1. Generation is the production of electricity at a power plant.

2. Transmission is movement of high voltage electricity from the generation plant to the point of distribution (substations).

3. Distribution is the local part of the delivery system of electricity from the transmission lines, and it includes substations that transform high voltages to lower levels for delivery to your home or business. Distribution also includes the maintenance of the electricity lines, restoration of electricity after storms and accidents, and customer billing and financial assistance to low-income customers. Such services will continue to be provided by your electric distribution com¬pany and regulated by the PUC.

YOU COULD INTERACT WITH TWO PLAYERS
1. Electric Distribution Company (EDC) is the company that owns, operates, and maintains the power lines and equipment to deliver electricity from the transmission lines to the customers. EDCs are regional public utilities like PPL and Allegheny Power. ECDs are responsible for customer services. It is where your bill comes from.

2. Electric Generation Supplier (EGS) is a PUC licensed person, corporation, generator, broker or marketer that sells electricity to customers by using the transmission or distribution facilities of an electric distribution company (EDC).
WHAT CHANGES WITH DEREGULATION?
The generation of electricity will be open to competition. Most importantly, you, the consumer, can shop for an electricity supplier, because electricity becomes a commodity that can be purchased from any licensed supplier or broker (EGS).

Nevertheless, according to PPL spokesman George Lewis, your current public utility is the “default supplier.”

“The public utility is required to provide electric supply for any customer that doesn’t have his own supplier,” said Lewis.

In other words, if you are a PPL customer and you don’t choose a supplier, then you will stay with PPL.

When you select a licensed electricity supplier, just where will your electricity come from after deregulation is completed? It will come from the PJM just as it always has.
Great, one more three-letter initialism. EDC, EGS, PUC, PPL and now PJM. Bear with me; it will come together.

PJM stands for the Pennsylvania, New Jersey, Maryland Interconnection LLC, also known as the Mid-Atlantic power pool. It is a large independent system operator that manages the regional transmission system for 13 states in the Northeast and Midwest, including most of Pennsylvania. PJM is our grid.

Your selected supplier will provide electricity to the grid that you use. If your supplier cannot deliver the necessary amount of electricity to the grid, then your EDC will provide the electricity to the grid, at its price.

Keep in mind; you cannot be penalized by your EDC for selecting another supplier, and there will not be any retaliatory brownouts. Again, even if your supplier fails to deliver, your EDC, because of its default supplier status, will provide you with power. So you’ll have that safety net of service.

There will be changes to rate tariffs. Current rate features you see on your bill probably will be gone for gener¬ated electricity (energy and capacity), but they may be retained for the distribution charges. Other possible changes or opportunities are on-peak and off-peak rates.

It is my opinion that we have only two options. One, start shopping, and make this marketplace work. Two, we have to learn to conserve and be more efficient in our use of the juice.

For more information on deregulation see Dennis Buffington’s “Deregulation of Electricity Generation in Pennsylvania – 2009 Update Part 1. The Legislation and the Implementation” at www.abe.psu.edu/extension/factsheets/h/energyindex.htm. Also check the educational inserts enclosed with your utility bill, and visit your utility’s website.

Next time in Part II, we will cover “Shopping for an Electricity Supplier,” and we will answer the question, “If deregulation creates competition, then why will my
electricity bill jump 30% or more?” Stay Tuned.

When High-Def Pigs Fly and a Reality Check for Captain Kirk

Usually seen flying off the shelves for football season, the high definition or HDTVs are rapidly replacing the cathode-ray tube TV that we all grew up with and loved.

Within the past few years, television technology transformed our comic book pixilated view of the world into something as sharp and clear as peering at galaxies from the bridge of the Starship Enterprise. Those dazzling celestial bodies appear like you could reach out to touch them, but there’s a catch.

As an agent for energy efficiency, I bring you bad news. You’re really going to pay for that crystal-clear view, and it’s going to be through your electric bill.

The two high definition technologies, LCD and plasma TVs, are energy hogs with plasma in particular pushing out other energy piggies from the power trough. If you bring a plasma TV into your home, it will gobble up most or all your energy savings for the year that you gained by using compact fluorescent light bulbs. It is also equivalent to running a second refrigerator. "Ouch," or should I say, “Oink,"

According to the Electric Power Research Institute, LCDs TVs use 75 percent more power - and plasma TVs a whopping three times more - than the traditional cathode-ray tube sets. The amount of power used varies depending on screen size and picture settings, how much you pay per kilowatt per hour, and time spent watching TV. A plasma set could add from $40 to $100 or more a year to the average household electric bill, while a LCD set’s yearly energy premium could be $15 to $25.

Maybe that extra power cost is not a big deal for some of you at the moment, but remember, that Pennsylvania's utilities rate caps are coming off soon, and every little bit you can save now on electrical usage is going to help your future household bottom line.

With more and more high definition programming coming into our homes, energy consumption is probably the last reason for someone’s choice of purchasing a new TV. Nevertheless, how do you get the best deal that has picture quality, price, and energy savings?

Look for the Energy Star label to guide your purchase. In November 2008, additional specifications were created for HDTVs to meet. A TV has to meet stringent requirements on energy consumption, but within its own category to receive the label. In other words, it has to be an apple to apple comparison. A plasma or a LCD TV still could have an energy star label, but keep in mind, both respectively consume more energy than a cathode-ray tube TV. The Energy Star website, http://www.energystar.gov/, indentifies current make and models that have their label.

Try http://www.practical-home-theater-guide.com/ to help you navigate the through the world of LCD and plasma TVs. The site compares the different technologies, picture quality, and advantages and disadvantages of them.

An online affiliate of CBS, CNET, offers a great deal of information on their television review site at http://reviews.cnet.com/television/?tag=hdr;snav. It reviews 150 TV models’ energy consumption and also sheds light on microdisplay rear projection models and the ancillary devices such as DVR, gaming devices, etc. There is a page on how to reduce TV energy usage.

Later this year, the new energy ratings become compulsory. Companies are pushing hard to get their models in line for the Energy Star label, and energy savings could head toward fifty percent based on previous models. If you are going to buy one, then do your homework.Energy efficiency is more than governmental programs and regulations. It’s about personal habits and attitudes.

Without getting too preachy, here’s a little tip to reduce your TV energy usage. WATCH LESS TV.

If it’s a reality show you want, then try going out on a clear summer night and do a little stargazing. You might see a streaking meteor silently lacerate the heavens or an orbiting satellite mock gravity while peeking back at you. You could ponder. You could ponder anything - life, death, God, science, why a puppy’s breath smells like scorched oatmeal - anything. In turn, you will reduce your utility bill, and very possibly energize yourself.


“Earth is even more beautiful than it is from the bridge, Spock.” Kirk said into his communicator while looking upward. “The smells... The sounds… And this night sky is incredible. You should see the Milky Way from here.”

“Of course, Captain. Would you like to return back to the ship?”

“I hate to but I suppose so.”

“Captain,” a Celtic-accented voice blurted from Kirk’s communicator. “I made some adjustments to the transporter. I can bring you back on half power.”

“Half power? Can we do that all the time?”

“I think so, Captain.”

“Good. Now, Scotty, beam me up.”