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Electrical choice? Choose wisely

  • Pennsylvania's Consumer Advocate Sonny Popowsky
    Pennsylvania's Consumer Advocate Sonny Popowsky
Published December 14. 2009 05:00PM

With the rate caps that have frozen electrical rates in northeastern Pennsylvania since the passage of the 1997 Electricity Generation Choice and Competition Act coming off at the end of this year, PPL customers are girding for increases up to 30 percent, according to Pennsylvania's Consumer Advocate Sonny Popowsky.

When it comes to utility problems, if you have a friend in Pennsylvania, it has to be Popowsky.

"We are a state office that represents Pennsylvania utility consumers before the Pennsylvania Public Utility Commission," he explained.

"For customers who are served by PPL, which is most of Carbon County, there have been rate caps in effect for the generation portion of the electrical industry for more than 10 years. They are coming off on Dec. 31. When the rate caps come off, rates will go up," he noted. "We expect, for PPL residential customers, by close to 30 percent."

That's if you stay with PPL as your electrical generation supplier. Since the passage of Electricity Generation Choice, if you have been reading your utility bill, you may have wondered about the break out of charges under the Billing Detail. There are charges in the categories Distribution, Transmission and Transition these are PPL's fees for connecting you to the power grid and are not changing regardless of whether you are taking power from the grid or you are sending power to the grid from your own windmill or solar panels.

What is changing is the generation charge. This is the cost for someone to produce electricity and put it into the grid.

The cost of producing electrical energy is affected by three principal factors: fuel, financial and greenness. The fuel factor refers to the source of the energy whether the electrical power is generated from the burning of a fossil fuel such as coal, oil, natural gas, landfill gas, or animal waste methane, nuclear, hydro, wind or solar.

The financial factor has many aspects. It may include costs to build and maintain generation facilities, the cost of borrowing money, and the terms that you are willing to accept to enter into a contract with a generating company. For example, some companies under the Electrical Choice program that are offering discounted rates, require contracts with cancellation penalties and/or other fees.

Another financial factor is the equivalent of the Electrical Generation futures market. Companies, such as PPL, buy blocks of electrical generation power often a year or more in advance.

According to Popowsky, the electrical generation power that PPL has ready to sell in 2010 was purchased at various times over the past two years. Since then, the recession has reduced the demand for electricity and the price has fallen so PPL's electricity for the 2010 year will be higher than competing companies who are purchasing electrical power at the current rates.

The third factor is greenness. Greenness refers to energy generated from nonpolluting, non-greenhouse generating, renewable resources. If you have an eligible solar cell system on the roof of your house, the electrical energy that the system produces is measured. For every megawatt hour produced, the owner receives a Renewable Energy Credit. This credit is traded at a marketplace. Plans that meet all greenness requirements can apply for and receive a "Green-e" certificate.

Who buys these RECs? You can through the Electrical Choice program. If you choose a green generation supplier, they may be either providing their own green power to the electrical grid, or purchasing RECs and charging you for the purchase as part of your electrical bill.

Now that you understand that PPL's rates are rising, you have a choice of electrical generating companies, and you have a general idea of what the decision factors are, what are the mechanics of making a choice?

The easiest way is to go to the Internet to, click on "Residential Electric Shopping Guide," and choose "PPL." For those who prefer a summation, here goes.

The Pennsylvania Electrical Choice program, one of the first in the U.S., allows electrical power consumers to select their electrical generation supplier. For PPL customers, the program goes into effect on Jan. 1, 2010. If you do nothing, you will continue to receive electrical power acquired by PPL. The power may be generated by PPL, may be purchased by PPL, or any combination.

Residential customers who continue to receive electrical power from PPL sources are estimated to pay 10.55 cents per kWh in 2010. This calculates to be a total generation and transmission monthly bill of $105.50 for 1,000 kWh a typical home usage for electrical appliances and lighting, or $211 for a home with electrical heating during the winter season.

At the time of the writing of this article, four options are being offered and others are pending. These are the four options all prices are in cents per kilowatt-hour.

Direct Energy

For conventional energy generation, this Canadian-based energy trading company offers a one-year fixed price contract at 8.99 for the first three months and 9.49 for the next 9 months; or a three-year contract for 9.99. They also offer a green although not currently Green-e certified option, a one-year "Renewable Wind Plan" at 10.99 for the first three months and 11.49 for the next 9 months.

Dominion Energy Solutions

The Virginia-based company offers a rate of 9.495, 10 percent off PPL's price for 2010 with no penalty for leaving early.

Community Energy

This wind farm company offers a rate of 2.5¢ per kWh above the rate of your current supplier.

PPL EnergyPlus

PPL's green, although not Green-e certified, entry offers to allow customers to buy RECs as part of their electrical purchase. Plans are available from $7 to $28 per month over and above the monthly charges.

For additional information:

• Pennsylvania Office of Consumer Advocate


• PPL Electric Utilities


• Direct Energy


• Dominion Energy Solutions


• Community Energy


• PPL EnergyPlus

(610) 774-7327 or (610) 775-7327

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