Electricity Deregulation Blog

PPL customers: Shop around to get best deal

Only about 8 percent of PPL Electric Utilities customers have taken steps to lessen the impact of 2010 electric rate hikes, according to the most recent figures. Others should educate themselves about electric deregulation that takes place this week and consider designating an alternative provider.

The approximately 70 percent of your PPL bill that deals with electric energy itself — rather than the equipment and upkeep — is going up. If you do nothing, your electricity cost will rise 30 percent. If you’re a residential customer and select one of the five providers competing for business, you’ll almost certainly pay a smaller increase.

The Pennsylvania Office of Consumer Advocate has a Web page listing residential suppliers and rates. Check it out at www.oca.state.pa.us/Industry/Electric/elecomp/PPL.pdf, or call them at (888) 668-4775 to learn more about suppliers’ offers.

Yes, the process can appear daunting. But for PPL customers, deregulation is here, and the only way to lessen the financial impact is to shop for a better deal. Compare your current per-kilowat-hour cost to that of competitors listed on the Consumer Advocate site. Check the terms; some charge a penalty if you sign a contract and cancel early. Then contact the companies of your choice to learn more.

Document your experiences and inform the Office of Consumer Advocate and the Pennsylvania Public Utility Commission if you feel you were treated unfairly. That will help form the basis for improvements going forward.

Unfortunately, higher electric prices are here for customers in the PPL service territory. It remains to be seen if competition and incentives to reduce consumption will produce the benefits proponents promise. But consumers must take matters into their own hands if they are to make the best of it.

Technorati Tags: electricity deregulation Pennsylvania

Switch is on for PPL customers. Deregulation, rate hike starts Jan. 1

At least 8 percent of PPL Electric Utilities’ customers have switched companies with deregulation — and a planned 30 percent hike in PPL electricity — only two days away.

State imposed price caps are coming off, and five new companies are competing for residential customers under the Public Utility Commission deregulation process.

It’s not too late for PPL customers to switch providers for the 70 percent of the billing charge open to competition, and won’t be too late even after the Jan. 1 deadline passes.

“As long as suppliers are still out there making offers, customers can switch,” says PPL Electric Utilities spokesman Ryan Hill. “That can happen throughout 2010.”

PPL Electric Utilities will begin focusing its business on transmitting electricity while allowing other companies to generate and supply it. PPL will be the default supplier for customers who don’t switch.

The Pennsylvania Office of Consumer Advocate said five companies are offering electricity to PPL residential customers: Con Edison Solutions, Direct Energy, Dominion Energy Solutions, Liberty Power Holdings and MXenergy.

No matter what, customers’ bills for electricity will go up in 2010. But all competitors are offering at least some rate plans at lower costs than PPL Electric’s $10.448 per kilowatt hour. Some companies will impose penalties if customers leave before the contract expires, while others allow customers to leave with no cancellation penalty.

To see company rate comparisons, go to the Consumer Advocate’s Web page at www.oca.state.pa.us/Industry/Electric/elecomp/PPl.pdf. or call call (888) 668-4775 to learn more about supplier offers.

PPL Electric Utilities’ service territory includes 1.4 million customers, 1.2 million of them residential users. About 117,000 customers — just under 100,000 of them residential users — switched providers as of mid December.

Technorati Tags: electricity deregulation Pennsylvania

Pa. leaders have failed to protect us from worst of electricity deregulation

Pennsylvania decision-makers’ poor understanding of the electricity industry led them into a big mistake 13 years ago: Giving up the state’s authority to control electricity-generation prices.

Consumers were promised a competitive retail electricity market that would restrain prices. The warnings that such a market would not develop went unheeded, but they turned out to be correct.

We’re told that today’s electricity prices are at early 1990s levels. That happens to be because prices at that time were off the chart for customers of utilities that invested in nuclear generation. Prices were trending downward by the mid-1990s, and they could have continued downward were it not for capping some rates at high levels in 1999.

Now Pennsylvania is approaching the end of the purported transition to full deregulation, with electricity monopolies still in place.

In the PPL service territory, that will mean a 30 percent rate increase for residential customers in January. Other utilities, such as PECO and FirstEnergy (including Met-Ed and Penelec), will go to full deregulation in January 2011.

rtunately, the governor and the General Assembly leadership are refusing to implement serious mitigation strategies to lessen the adverse impact of full deregulation.

Competition in electricity generation cannot happen because the profit margin on a kilowatt-hour of electricity is too small. That’s why the regulatory paradigm was created in the first place.

Utilities needed a huge customer base to make any money in this capital-intensive industry. The quid pro quo for their monopoly status was that they would guarantee reliable, affordable electric service. And except for where utilities opted for expensive nuclear power, that was what happened.

The state abandoned many consumer protections when it gave up regulating generation prices. Electricity generators no longer have to build plants or sell power to customers in their service territories, as they did under regulation.

This means fewer plants are being built in the state, and it could mean even higher prices. The problem is that a few utilities own all the generation capacity and have no serious competitors, so they can charge whatever the market will bear.

Deregulation proponents keep promising that a market will develop when the rate caps come off. But we saw what happened when the caps ended in the Duquesne Light service area in 2002: Not much.

There was a rate decrease due to the sale of Duquesne’s generating plants, but it has been virtually offset by subsequent rate increases. No competitors entered the Duquesne market, and customers have virtually no alternative supplier choices.

A couple of competitors have said they intend to offer service in the PPL service territory in 2010. However, these offers are likely to be limited to a relatively small number of customers at a discount too small to encourage customer switching. PPL’s monopoly status will remain unchallenged, and PPL Corp. (not PPL Electric Utilities) will pocket all of the 30 percent increase.

The biggest deregulation mistake was letting utilities sell their generating assets, often to wholly owned, unregulated subsidiaries. That has made it difficult to mitigate the impact of the coming rate-cap expirations.

However, there are, at least, two important measures state leaders should implement to ease the burden on ratepayers.

First, the Legislature should pass a law placing any newly built generation capacity under regulatory control. Over time, this would ensure that enough energy is available to meet demand at a reasonable price, forcing unregulated electricity suppliers to lower their prices.

Second, the state Public Utility Commission should open an investigation into costs claimed by the utilities. Before deregulation, utilities said the power plants they had already built would lose money in a competitive market.

To get them to support deregulation, the state permitted them to collect $12 billion in stranded costs from customers during the transition to deregulation. This figure was supposed to represent the difference between what the utilities spent on their generation assets and their worth on the market.

Now that we know what the actual market price for electricity is, the PUC can determine whether those generators were really uncompetitive. It’s likely that an investigation designed to true up the cost estimates will find that there were few, if any, stranded costs.

If that’s the outcome, the money should be refunded to ratepayers. A $12 billion refund could help offset rate hikes until other steps are taken to address the long-term consequences of the deregulation fiasco.

David Hughes is executive director of Citizen Power, a nonprofit advocacy group based in Pittsburgh. www.citizenpower.com

Technorati Tags: electricity deregulation Pennsylvania

8% of PPL customers switch suppliers

Facing a 30-percent rate increase on Jan. 1, nearly 117,000 PPL Electric Utilities customers have already run for the exit.

More than 8 percent of PPL Electric’s 1.4 million customers have opted to buy discounted power from alternative suppliers, said Ryan Hill, the spokesman. The total includes 100,000 residential customers.

The end of state-mandated rate caps for the Allentown utility is expected to be a major test for deregulation in Pennsylvania. Customers of Philadelphia’s Peco Energy Co. won’t be able to shop around until the end of 2010.

PPL is is expecting many more customers to opt for alternative suppliers after Jan. 1, when the competition for customers is officially open. Already, five retail power suppliers are licensed to sell power to PPL customers, and they are offering discounts of about 10 percent to those who sign up for a year.

With the end of PPL’s monopoly on Jan. 1, rate caps will come off and the utility’s default rate will go up about 30 percent. The rate is based up power-supply auctions PPL held over the past three years. PPL’s rate for power will be 10.448 cents per kilowatt hour.

Alternative suppliers are able to buy power at current wholesale rates, which have come down this year in the recession. They are offering rates on Jan. 1 ranging from 9.38 cents to 9.52 cents per kilowatt hour for customers who sign up for a year. A customer using 1,000 kilowatt hours a month would save about $10.

PPL Electric Utilities will continue to be the sole distribution company in its territory, which covers all or parts of 29 counties in eastern and central Pennsylvania, stretching from the New York border to the Maryland line. It includes parts of Chester, Montgomery and Bucks counties, as well as Harrisburg, Lancaster, Williamsport and the Lehigh Valley.

PPL will continue to handle billing and customer service for the suppliers, and it will collect an additional fee of about three cents per kilowatt hour from all customers for distribution charges.

A comparison of the suppliers and their rates is available from the Pennsylvania Office of Consumer Advocate:

http://www.oca.state.pa.us.

By Andrew Maykuth

 

---

Contact staff writer Andrew Maykuth at 215-854-2947 or amaykuth@phillynews.com.

Technorati Tags: electricity deregulation Pennsylvania

Higher utility bills on the way

JOHNSTOWN — Electricity, at both the federal and state levels, will cost more as new programs are implemented.

While the Senate wrestles with final versions of cap-and-trade federal legislation and coal-fired power plants are converting to renewable sources, higher utility bills are on the way in the coming decade.

And against this national picture of price hikes is a backdrop of electrical rates in the state that will skyrocket in many Pennsylvania households as much as 30 percent by 2011 because of expiring rate caps.

It will start next month in Harrisburg, with customers of PPL Corp,. and then one-year later with customers of Allegheny Power, Metropolitan Edison, Peco Energy and Pennsylvania Electric.

Consumers will be allowed to “shop” for the best rates – a result of the state’s 1996 deregulation law, aimed at fostering competition among power companies.

For now, electricity rates are down because of the economy, but analysts say they are expected to rise again, driving the increase even higher.

Pennsylvania’s weatherization programs have received more funding in anticipation of the rate hikes.

There has been no sign of state legislative efforts to extend the state rate caps.

By SUSAN EVANS
The Tribune-Democrat

Technorati Tags: electricity deregulation Pennsylvania

RI picks Chevron for Narragansett wind project

PROVIDENCE, R.I. — Rhode Island has selected Chevron Energy Solutions to develop and maintain several onshore wind turbines in the coastal town of Narragansett, Gov. Don Carcieri announced Tuesday.

Chevron’s proposal beat out bids from three other firms. It plans to finance the site work and turbine construction without funding from the town or state, Carcieri’s office said.

Current plans call for the turbines to be built on four sites owned by either the town or the state. The first turbine could be finished by the end of next year, said Department of Environmental Management director W. Michael Sullivan.

“They were from an economic analysis both the strongest company, and they put more money for the state and the community on the table than anyone else,” Sullivan said.

Each turbine is expected to cost between $3 million to $3.5 million, Sullivan said.

The precise number of turbines hasn’t been determined. The state initially selected five sites in Narragansett — a coastal town in southeastern Rhode Island — but withdrew one after determining it wouldn’t be feasible. The remaining four properties include a wastewater treatment facility near Scarborough State Beach and a Department of Public Works site.

Representatives from Chevron Energy Solutions, a clean energy company and a subsidiary of energy giant Chevron Corp., did not immediately return a call seeking comment.

In a statement, Carcieri called Chevron a “proven leader in renewable energy” and said wind was the proven best source available for renewable energy.

The turbines are separate from a larger wind farm that Carcieri has proposed building miles off Block Island and that could be capable of generating about 15 percent of the state’s electricity.

Last summer, the town and state sent surveys to around 800 randomly selected Narragansett residents to gauge public reaction to the proposal. More than three-quarters reacted favorably to the proposed turbines, Sullivan said.

John Torgan, of the environmental group Save the Bay, said his organization embraced wind energy but wanted to make sure that sites for turbines were selected in as transparent a method as possible.

“In many ways, we’re pioneering this for Rhode Island and for coastal areas. We don’t have a lot of precedent, at least in Rhode Island, how to go on to develop these facilities. That’s been part of the challenge,” Torgan said.

By ERIC TUCKER (AP)

Copyright © 2009 The Associated Press. All rights reserved.

Technorati Tags: green energy, wind energy

Governor O’Malley Wants to Decrease Electric Rates

MARYLAND- Governor Martin O’Malley is trying to decrease electric rates for the residents of Maryland.

Governor O’Malley is asking the Public Service Commission to require that new power be delivered in the state at controlled prices.

The governor says that a deregulation policy that went into effect back in 1999 did not reduce electricity prices or offer a dependable energy supply.
There is no word if state regulators will take the governor’s advice.

Opponents say if regulators require utilities to build new plants rate payers would be the one paying the cost.

Technorati Tags: electricity deregulation Maryland

Few Central Hudson customers take advantage of deregulation

A group of competitive energy suppliers is proposing that Central Hudson Gas & Electric Corp. spend up to $800,000 to promote their business with a postcard campaign, bill stuffers and a public relations drive.

It’s your money, as a customer of Central Hudson, that they’re talking about.

They call it a “consumer outreach campaign” to Central Hudson customers to “assist in the education of consumers on how energy choice works and how they can go about selecting an alternative energy supplier, if they so choose.”

The money is in Central Hudson’s coffers and was provided by customers between 2006 and 2008, according to Central Hudson spokesman John Maserjian.

The proceeding at hand is a decision-making process by the Retail Access Collaborative, a group empowered by the state Public Service Commission to come up with ways to spend the funds.

Most of the members are “energy service companies,” or ESCOs, that market the supply of gas and electricity and which may be chosen as alternatives to Central Hudson on the supply side, though Central Hudson still provides the delivery.

Relatively few Central Hudson customers have migrated to the ESCOs. A report from January showed 15,343 electric customer accounts, or 5.1 percent of eligible ones, had shifted.

Of 49 large nonresidential accounts, 25 had shifted, or 51 percent, showing heavy participation among the biggest, mostly industrial, users. But among home accounts, only 4.4 percent had moved. The vast majority have stayed with Central Hudson as a supplier.

The numbers are about double those of a year earlier.

Recently, Steven Lant, who is chairman, president and CEO of Central Hudson’s parent, CH Energy Group, made public comments about “the unmet promises of deregulation,” the Public Service Commission’s program that led to the customer choice initiative, the sell-off by utilities of their generating plants and the creation of a marketplace for wholesale power sales.

Lant said that despite “a decade of promotion,” few consumers choose alternative power suppliers.

One party in the Retail Access Collaborative is urging that the money be reprogrammed away from the whole area of marketing about customer choice.

“There is no objective evidence that switching to an ESCO is to the residential customer’s long-term advantage or that is cost-effective from either a customer or total societal perspective,” said Gerald Norlander, executive director of the Public Utility Law Project, or PULP. He called the plan “more ESCO marketing malarkey, relabeled deceptively as ‘utility customer education and outreach.’ “

“Any real educational materials should address the many problems faced by consumers who switch to ESCOs,” he added.

He said Central Hudson has calculated the postcards would cost about $660,000.

“The best thing to do is give it back to the customers and let the customers spend the money,” Norlander said. Or, “expand their low-income program to help people having trouble.”

That would be a radical change from the nominal purposes of the fund. Maserjian said, “The funds were originally earmarked by the commission for the ‘promotion’ of retail marketing and the Customer Choice program. As a result of a subsequent commission order, they may now only be used for outreach and education, not promotion.”

Efforts to reach the marketers who made the proposal brought no results this week.

But James Denn, a spokesman for the Public Service Commission, defended the retail access program.

“Large companies clearly see the value of choice, and that helps keep their costs down, which helps the local economy. More important is the fact the load percentage has shifted, up to 87 percent in some categories. That is an important issue in terms of ensuring long-term energy deliverability. Finally, Central Hudson’s experience is not universal; all other utilities have seen higher migration rates.”

But it’s still a hard sell here, apparently. Michael Lanari of Beacon has been trying the alternative systems for his home’s natural gas supply and got whacked by a change in the markets.

“I got all excited earlier this year when fixed-rate contracts dropped into the 90-cent-a-ccf (hundred cubic feet) range and locked into a contract based on that,” Lanari said. “Little did I know that rates were about to decrease into territory not seen in five years. I wound up paying to get out of the contract, which in the long run will still be a savings based on my usage. So even the savviest of ESCO shoppers can find existing in the ESCO world a real challenge. I am back with Central Hudson as gas provider for the first time in four years and will continue to evaluate my options going forward.”

Lanari disagreed with the ESCO proposal. He said Central Hudson should be using the money “to reduce rates for consumers who have had to deal with higher than normal gas rates in the last few years.” He added that there’s a lack of standardization to let customers compare ESCOs. He said ESCOs should offer more competitive deals “without being subsidized from Central Hudson.”

One useful fact for customers would be a report on which ESCOS retain customers and which ones lose them, PULP’s Norlander said. That information is sent by all utilities to the commission, but it is not made public.

“We just wonder, are some companies better than others in terms of customer satisfaction?” Norlander said.

A check of commission records shows that the utilities ask for the data to be exempt from public disclosure as a trade secret and the commission grants that.

Maserjian, of Central Hudson, said disclosure would harm companies and the markets.

“As in any business or industry, certain information, if obtained by a competitor, could provide an unfair advantage,” he said. “By keeping this information confidential, the playing field is kept level and the competitive markets are able to function properly. This is in our customers’ best interest, as a compromised market cannot always provide competitive services and prices.”

Norlander said another issue with retail access is that it’s subsidized by a state break on sales taxes on delivery services. This break is one that only the ESCOs can get, and it lowers their costs compared with those of a utility such as Central Hudson.

That ESCO break costs the state $150 million a year now in “revenue foregone,” he said, citing data from the state Department of Taxation and Finance.

“If this is a marketplace, why are we subsidizing it?” Norlander asked.

By Craig Wolf at cwolf@poughkeepsiejournal.com or 845-437-4815.

Technorati Tags: electricity deregulation

Regulators Approve Key Contract for New 48-Megawatt Sempra Generation Solar Power Plant

Largest Operational Photovoltaic Solar Facility in North America to Start Construction in January

Sempra Generation announced today that the California Public Utilities Commission (CPUC) has approved Pacific Gas & Electric’s (PG&E) contract to purchase 48 megawatts (MW) of photovoltaic solar power from Sempra Generation’s Copper Mountain Solar facility.

The CPUC’s approval of the contract signals the January 2010 construction start for the facility, an expansion of Sempra Generation’s existing 10-MW El Dorado Solar power plant. Both projects are located near Boulder City, Nev., about 40 miles southeast of Las Vegas, and each will provide power to PG&E under two 20-year power contracts.

When completed by late 2010, the combined 58-MW installation will become the largest operational photovoltaic solar-power facility in North America. Together, the two facilities will utilize nearly 1 million photovoltaic panels.

“The approval of this power contract will allow us to bolster and expand a vital renewable energy hub for the western United States, one that will provide citizens in California with reliable and sustainable power for years to come,” said Michael W. Allman, president and chief executive officer for Sempra Generation. “The prime desert location for this solar project provides a reliable, efficient daytime source of energy for more than 330 days a year. We continue to be very pleased with the positive reception Sempra Generation’s wind and solar projects have received from existing and potential customers and look forward to continuing the development of large, utility-scale renewable power projects that meet North America’s ever increasing demand for clean energy.”

Unlike other solar-power facilities, Sempra Generation’s plants do not use heated water or other liquids in the power-generation process. Solar facilities generate electricity during the day when customer demand typically peaks.

Sempra Generation operates and maintains a fleet of natural gas fueled and solar power plants serving the U.S. market and is in the process of developing renewable power projects in the Pacific Southwest. Sempra Energy (NYSE: SRE), based in San Diego, is a Fortune 500 energy services holding company with 2008 revenues of nearly $11 billion. The Sempra Energy companies’ 13,600 employees serve more than 29 million consumers worldwide.

This press release contains statements that are not historical fact and constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

Technorati Tags: electricity deregulation California, green energy, solar energy

$30.16M refund OK’d for customers of PPL

HARRISBURG | Pennsylvania regulators Thursday approved a $30.16 million refund for residential customers of PPL Electric Utilities Inc., resulting from overcollection of a charge used to pay for infrastructure improvements.

The Pennsylvania Public Utility Commission voted 5-0 to approve the rebate. An average refund for a typical customer was not available.

These consumers will see the “transition charge” portion of their bill move from a charge to a credit.

PPL was permitted to collect a “competitive transition charge” following a state law in 1997 that authorized deregulation of Pennsylvania’s electricity market.

Law allowed PPL to recover “stranded costs,” which include infrastructure investments made before electricity was deregulated, because those costs could not be recovered in a competitive environment, the PUC said.

PPL also will refund $2 million to its industrial customers as part of the PUC decision.

In addition, the commission said PPL undercollected the charge from its small commercial and industrial customers by about $17.6 million, meaning those customers will continue to pay the charge in 2010.

Technorati Tags: electricity deregulation Pennsylvania