What is Pennsylvania Energy Choice?

In 1995, the Pennsylvania Public Utility Commission oversaw 11 regional electric utilities that had monopolies in their services areas. These utilities controlled the cost of the electricity the generated, the cost of distribution, and the cost of selling it to customers. Consumers had only one choice - the utility. As a result, PA energy consumers paid about 15% above the national average. And while the utilities got a guaranteed income, they saw very little incentive to modernize equipment or improve service, efficiency, or cut costs.

In 1996, the Pennsylvania legislature passed the "Electricity Generation and Customer Choice and Competition Act". Under the law, utility companies that wanted to participate in the Energy Choice market were obliged to sell off their generation, transmission, and retail operations to become distribution-only companies. As a result the state's 11 utilities now focus solely on distributing power to homes and businesses in their territory.

The law also requires local utilities to provide electricity supply to protect customers from service disruptions if a supplier leaves the state and to supply those customers who choose not to shop for a retail supplier. These utility default rates are also called the "Price to Compare" or PTC.

Pennsylvania energy consumers now have a choice over where they could buy their electricity. They can now shop for the best offers and buy their electric generation supply directly from a retailer. Pennsylvania electric generation suppliers compete with each other for customers by getting the best supply deals on the energy wholesale markets. This way, competition keeps energy prices lower.

Who Do I Call If My Power Goes Out?

Because your local utility owns and operates the electric distribution grid, you should call them if your power goes out. Don't call your electricity supplier!

All power lines are extremely dangerous! Never attempt to move a downed power line by yourself. Report safety hazards involving power lines immediately by calling 911 and then notifying your local utility.

All local utilities in PA have webpages that let you report power outages and also let you monitor repair efforts.

What is the Price to Compare?

The Price to Compare is the price the utility pays generator companies for electricity. It includes the price to generate the electricity, as well as the cost to transmit it over high voltage transmission power lines to your utility's local electrical switching yards. It's from there that the electricity is distributed throughout the utility's local grid and delivered to businesses and homes.

PTC rates vary from utility to utility and periodically change. Rates are set through auctions every 3 to 6 months to cover different delivery periods throughout the year. Generating companies who submit the lowest bids are awarded contracts with your utility to supply electricity. When the auctions are completed, the PA PUC must approve the prices for both the generation supply and transmission.

The key feature of the PTC rate is that it is a direct pass-through price from the generator without mark up. PTC customers pay what their local utility pays for this electricity.

The downside for PTC customers is that they can expect the rate to change up to several times a year depending on auction results. That means it could be low some months, and higher during others.

How Do I Choose an Electricity Supplier?

Unlike your local utility's PTC rate, retail generation suppliers determine their own rates without any oversight by the PA PUC. Retail suppliers not only compete to arrange supply contracts with generating companies but they also shop for deals on the wholesale energy markets.

Retail suppliers primarily offer customers two types of plans: variable rate and fixed rate.

Variable rate plans last month-to-month. Their main benefit that there's no contract and customers can switch to a different supplier at any time. However, variable rates vary according to market conditions and other costs affecting the supplier. For that reason, suppliers are totally free to change their rate from one month to the next. That means there's absolutely no guarantee what will happen to the rate. Rates may fall during in the autumn or spring but during high-use seasons like summer and winter, they can rise or suddenly spike.

Fixed rate plans have set rates that don't change for a set period of time. The main benefit is that customers can lock in a low rate and keep that rate steady for a potentially very long time. And that can save money during periods of uncertain or increasing energy prices. Their drawback is that if market rates fall after a customer signs on to a plan, they can wind up paying more. Fixed rate plans can also carry a substantial cancellation fee if customers wish to leave the contract early.

Selecting the best plan also depends on several circumstances:

• How long will you be living in your home? If you're moving in 6 months, don't sign up for a 36 month plan just because it's the cheapest rate!
• The time of year that you're shopping.Energy prices follow an annual cycle. You can find the best rates at the right time of year.
• The price of natural gas. Natural gas fuels most generator plants. Think strategically; track those prices and consider whether you'll save more money by locking in a rate now or waiting until later.
• Do you want to support renewable energy? Yes, you can get 100% renewable energy to power your home!

Consider Supplier Incentives

Many retail suppliers offer customers a variety of reward and discount programs. While these might not directly reduce what you pays for electricity, they can help you reduce their expenses in other ways. Many rewards programs offer gift cards, restaurant and store discounts, or air miles.

But you don't just want to sign up for any old rewards program. For example, if a provider incentive offers generous air miles and you don't fly very often, then it might not be the best deal. You want to take a little extra time to find the best rewards programs that actually work for your lifestyle.

When Is the Best Time To Shop For Electricity?

The trick to shopping for the best rate lies in the fact that energy rates follow an annual cycle. The biggest thing that affects electricity rates is demand. That is, the amount of electricity are people using in your area. And the thing that really drives demand is the weather, especially during the summer and winter.

Energy rates tend to be lower during the fall and spring because seasonal temperatures are typically mild; not too hot and not too cold. Yes, it's true that how much prices dip depends things like the commodity price of natural gas, transmission costs, etc. However, because mild temperatures cut the demand for heating or air conditioning, overall energy rates dip.

These two seasons are known as the "Shoulder Months" and they're the best time of year to shop and lock in the lowest rate. For Pennsylvania, that translates into mid-April through May.

What Questions Should I Ask Suppliers?

The best way to avoid making a wrong choice it to ask the right questions. That way, you can learn exactly the information you need to help you save money. So, always ask electric suppliers these questions:

• What is the retail electricity supplier's PA PUC license number?
• What is the exact price per kilowatt-hour (kWh) for electricity?
• What does the price include? Are there any fees or taxes that are not included in this price?
• Is the offer a fixed rate or variable rate?
• Is the rate open only to new customers?
• Is the offer an introductory rate? If so, how long does the introductory rate last? What does the rate go up after the introductory period ends?
• What is the total price of my usage? NOTE: You can use your most recent utility bill to find out how much the plan would cost you. The average usage for a typical Pennsylvania home is about 864 kWh per month.
• How long is the contract term for this plan? What happens when it is over?
• Will the contract automatically renew at the end of the term? If so, what sort of plan?
• Can I cancel the agreement at any time?
• Is there an early termination fee or other fee for switching to another supplier before the contract period is over?
• What happens if I move outside my current service territory during the contract term?
• When will I receive a complete contract summary and the terms and conditions?