SUNBURY — In just a few weeks, the cost of electricity for most of us in the Valley will go up substantially.
This will happen because in 1996, electric rates were deregulated. However, faced with an uproar from consumers, the state legislature capped rates until 2010.
When those caps come off on Jan. 1, residential electric rates will go up 29.7 percent, or about $30 a month for the typical PPL customer, and even more for homes with electric heat.
Even so, said Jennifer Kocher, spokesman for the state Public Utility Commission, which regulates electric utility companies, PPL will not make any additional profits from the increase.
“By federal law, they cannot make a profit on their generation costs,” she stated. “They can only pass those costs through.”
Many people don’t understand that PPL Electric Utilities, which delivers electricity to homes and businesses throughout central Pennsylvania, is now separate from PPL Corp., the company that generates electricity, said Ryan Hill, a PPL Electric Utilities spokesman.
PPL Electric Utilities buys some electricity from PPL Corp., but it also purchases from 10 other suppliers. Officials of the two companies are barred from discussing rates with one another.
The increase is necessary because PPL is required to purchase 100 percent of its anticipated needs, even though other vendors may offer power at lower rates. The company has been buying power at auction every six months, and similar to gasoline prices over the past several years, the price of electricity has fluctuated, Kocher said.
“Sometimes they bought when it was high and sometimes when it was low,” she said.
The market has come down substantially, she said, which allows others to buy at lower prices and offer lower rates to consumers.
With the January change, electricity vendors are offering consumers a choice for the first time.
If you don’t want to choose, you don’t have to do anything, and PPL Electric Utilities will continue to feed you power, but at a higher rate per kilowatt-hour.
Each company selling electricity to consumers has a number known as the Price to Compare. That number is the cost per kilowatt-hour of generation and transmission. For example, the current PPL Price to Compare today is 5.95 cents per kWh. In 2010, the PPL Price to Compare jumps to 10.55 cents. Electric bills include additional charges for taxes, interest charges and so on.
The state Public Utilities Commission has approved four companies to date to provide competitive electric rates in the central Susquehanna Valley. On Monday, the fourth company, Direct Energy, was approved. The other companies include Community Energy, Dominion Energy Solutions and PPL Energy Plus.
PPL Electric Utilities transmits electricity to 1.2 million residential and 170,000 commercial customers, according to PPL’s Hill, and many are asking questions.
“There’s lots of interest in electric choice,” he said. “We’re getting hundreds of calls per day with questions.”
Hill said electricity consumers need to heed two key messages. They need to shop for the best prices and to save power whenever possible.
“Consumers can find a better deal,” he said. “They can consider energy efficiency.”
Easy and inexpensive steps include replacing incandescent light bulbs with compact fluorescent bulbs, weatherproofing with caulking and weather strips and replacing old appliances with Energy Star-rated units.
“You can save from 10-50 percent without spending a lot of money,” Hill said.
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Consumers can shop for best energy prices
Rates set to go up Jan. 1
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