Blog entry January 2010

The good news continues in Pennsylvania as more and more residents experience the benefits of competition. Less than a month after rate caps expired in the PPL Electric Utilities service territory in the northeastern and central part of the state, almost 20 percent of total customers have switched to alternative energy suppliers offering power at up to 10 percent off PPL Electric’s current default rate.

As of this week, 263,000 PPL customers have chosen alternative power suppliers. This number represents 218,000 residential customers and 45,000 commercial and industrial customers, and means 40 percent of the total electric load and 19 percent of the residential load is shopping. Observers expected customers to consider alternatives, but the rate of activity has “been a very dramatic, robust response,” according to Pennsylvania State Consumer Advocate Sonny Popowsky.

The recent American Wind Energy Association (AWEA) Year End 2009 Market Report showed that the U.S. wind industry set new records for installed wind capacity by adding nearly 10,000 megawatts of new capacity in 2009. Again, as in past years, competitive markets are leading the way in developing this clean and renewable energy resource.

The report underscores wind’s contribution to our national energy portfolio, and the role competitive markets have played in spurring new capacity. America now enjoys 35,000 megawatts of installed wind power generation, nearly 2 percent of our total national energy capacity. Four of the top 10 (and two of the top three) highest-volume states in installed capacity are competitive markets. In addition, the total combined installed capacity of the 17 competitive markets states is 16,500 megawatts - nearly half of the nation’s total installed capacity.

Customers in the Mid-Atlantic region have recently seen several rate reductions as a result of competition, and this week businesses in Delaware experienced firsthand the benefits of choice in the electric market. On Wednesday, members of the Delaware State Chamber of Commerce announced they had secured a long-term electricity contract nearly 15 percent below their default rate, or the standard rate offered by their existing power supplier.

More than 30 individual businesses banded together to shop for competitive energy prices within the PJM Interconnection market, resulting in welcomed cost savings during a period of economic downturn. 

Michigan State Senator Cameron Brown has announced plans to introduce legislation raising the state’s limit on electricity market competition to 30 percent, according to the trade publication Electric Power Daily. This action signals new promise for consumers facing rising electricity rates in a beleaguered economy.

Last August, and again in December, electricity consumers in Consumers Energy and DTE Energy’s respective service territories reached Michigan’s 10 percent limit on consumer choice for electricity.  This left 90 percent of the electricity demand for those two utilities — which serve the vast majority of the state’s consumers —without a lower-cost alternative to their monopoly utility provider.

Hyperbole and half-truths have clouded the picture of Pennsylvania’s expiring rate caps and ignore the fact that retail electric competition has saved that state’s consumers billions, according to a recent op-ed by Jan Jarrett of PennFuture. Scary stories, she says, are becoming urban legends.

Responding to critics who argue consumers should return to monopoly control of electric markets, Jarrett points out that restructured power markets have paid dividends to much of the state. Beyond the fact that state electric rates are now 5 percent lower than the national average (compared to 15 percent above the national average before competition), renewable wind power generation and energy conservation innovations have boomed in Pennsylvania’s organized market –a direct benefit of competition.