Hanger: Generation Rates From Retail Choice Suppliers At PECO 12% Lower Than 27 Years Ago On Nominal Dollar Basis -- EnergyChoiceMatters.com

Hanger: Generation Rates From Retail Choice Suppliers At PECO 12% Lower Than 27 Years Ago On Nominal Dollar Basis

-- Today's Retail Supplier Rates 50% Lower On Inflation-Adjusted Basis

December 18, 2023

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Copyright 2010-23 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The following is a contributed submission authored by John Hanger, former Commissioner of the Pennsylvania PUC and former Secretary of the Pennsylvania Department of Environmental Protection. EnergyChoiceMatters.com disclaims any responsibility for the content or data contained in the report. Any views expressed in the report may not necessarily reflect the view of EnergyChoiceMatters.com

By John Hanger

Twenty-seven years ago, Pennsylvania ended regulated utility monopolies for the generation of electricity and replaced them with free enterprise generation competition. The result has been much cheaper and cleaner electricity generated.

Indeed, electricity competition cut electricity generation costs by 48% since 1996. Today, hundreds of thousands of PECO residential customers have the power to shop for their electricity and to save an additional $100 to $500, depending on how much electricity they use.

Starting in 1996-1998, electricity customers of PECO were allowed to choose their supplier of electricity which generates the electricity that is delivered by PECO’s distribution lines to homes and businesses in the Philadelphia area. The generation monopoly, previously granted to PECO and imposed by state law, was ended by the Pennsylvania General Assembly, which passed the Electricity Competition and Customer Choice Act in 1996.

So, what happened? Ending PECO’s generation monopoly and giving customers the power to choose their electricity supplier worked for consumers and the environment.

The generation portion of PECO bills is nearly 50% lower today than it was in 1996, when PECO’s electricity rates were among the ten highest in America!

In 1996, the generation portion of PECO’s total residential electricity rate was 8.2 cents in non-inflation adjusted prices. But inflation has gone up 94% since 1996, making 8.2 cents in 1996 the equivalent of 16 cents today.

How does that 16 cents compare to prices for electricity products offered today by competitive electricity suppliers to PECO customers? It is nearly twice as much as today’s prices for competitively generated electricity and PECO’s default rate of 8.91 cents!

Indeed, right now, there are numerous competitive electricity offers with fixed rates for 1 year or longer available for 9 cents per kilowatt-hour or 8 cents or 7 cents or even less than 6.5 cents! Those prices would save many PECO customers hundreds of dollars.

According to the Pennsylvania Public Utility Commission’s (PAPUC) electricity shopping guide, recently there were 117 competitive offers in the PECO area. The lowest fixed priced product cost 5.68 cents per kilowatt-hour or more than 3 cents per kilowatt-hour less than the default price you get if you don’t shop. So, give yourself a holiday gift and shop!

Also, those who shop will find that there are numerous products generated with 100% renewable energy and many products with fixed prices for 1 year or 2 years or even longer.

A word of caution about variable rate products, the prices of which change often. Only consumers who pay close attention to prices should even consider variable rate products, as prices can increase substantially from one month to the next.

Shopping for electricity and comparing electricity product offers are made easy by the Pennsylvania Public Utility Commission’s Electricity Shopping guide. Go to www.papowerswitch.com, enter your zip code, and see how much you may be able to save.

Also, twenty-seven years ago, electricity generated statewide in Pennsylvania was an enormous polluter, with more than 50% of it coming from burning coal that sickened and killed tens of thousands every year and worsened climate change.

But coal plants could not compete in the competitive electricity market and have been closing, reducing coal generation to just 15% of Pennsylvania’s electricity, and making our air much cleaner.

In addition, consumers who want to support renewable energy generation can shop for electricity generated with those resources. Consumers should learn from a supplier what type of renewable generation is used and where it is located before making a choice.

Though electricity competition has driven down prices and closed many polluting plants, even better options are arriving. Already, in Texas, consumers with solar generation or batteries at their homes or businesses can slash their electricity bills by selling power into the market during periods of high wholesale prices.

Other consumers in Texas with electric vehicles are now offered periods of free charging or $25 per month for EV charging at any time. Companies are aggregating small customers with batteries and solar into Virtual Power Plants to maximize revenues for them and to improve the reliability of regional power grids.

Modest regulatory changes in Pennsylvania would make these options available in Pennsylvania as well. Now is the time to build on this success!

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