PPL Electric

A major Pennsylvania environmental group has endorsed competition’s benefits, just as rate caps expired across the state and millions of consumers gained the ability to shop for their electricity on January 1. PennFuture’s report, “Consumers Win: A Decade of Electricity Competition,” touts the success of competition, saying “the benefits to Pennsylvania ratepayers cannot be disputed.”
 

The percentage of customers shopping for alternative energy suppliers has grown in four key restructured markets, according to recently released data from state regulators.
 
These new numbers compiled from earlier this year, combined with “astounding” shopping rates in Pennsylvania’s PPL Electric Utilities service territory, are the latest evidence of competition delivering lower-cost competitively priced electricity to consumers.
 

Electricity competition is at an important crossroads in Pennsylvania. Six months ago, rate caps expired in one Pennsylvania utility’s service area, and six months from now rate caps expire in the rest of the state. For the first time, the state’s entire retail market will be open to competitive forces.
 
But already, the success of competition is clear. Wholesale electricity prices are decreasing, and hundreds of thousands of consumers are switching power suppliers to obtain lower-cost electricity than is available from their incumbent utility suppliers.
 

Pennsylvania has one of the most dynamic and robust competitive retail markets in the nation, declared Robert Powelson, Pennsylvania Public Utility Commissioner. Powelson wrapped up an exciting opening day at KEMA’s 21^st Executive Forum by leading a panel discussion on the outlook for competition and choice in Pennsylvania.

Regulatory certainty from the state public utility commission (PUC) is creating stability and enabling competition’s benefits to flourish. “The numbers tell the story right now,” said Powelson. Beyond the success in PPL Electric Utilities’ territory, restructuring’s results prove a powerful point:

• Customers have enjoyed 10 years of stable rates and saved over $7 billion
• Generation sources have increased their operational efficiencies
• Before competition electric rates were 15 percent higher than the national average, but are now well below the national average

Competitive electricity markets are making innovation possible, reports Forbes Magazine in an article that highlights Vornado Realty Trust, a large owner and manager of real estate in the United States.

Using an innovative load response program offered by COMPETE member Constellation NewEnergy, Vornado is able to modulate the power it uses in its properties based on the real-time pricing available in open competitive markets.  As a result, Vornado is using less energy and, in turn, lowering its costs.

Less than three months after the highly publicized removal of artificial rate caps in PPL Electric Utilities’ territory, consumers enjoy multiple power supplier options and clean energy is thriving in competitive electricity markets across the state.

Consumers have saved money under the competitive model when compared to the traditional monopoly model,” James Cawley, Pennsylvania Public Utility Commission (PAPUC) Chairman, testified at a recent State Senate hearing. “It’s been a great success.” More than 550,000 customers have switched power suppliers statewide, reports the PAPUC’s PAPowerSwitch Web site, which provides consumers with advice on how to find the right competitive power supplier.

The amount of customers who have switched within the PPL Electric Utilities’ service territory is “astounding,” said Chairman Cawley. 320,000 residential customers – and 380,000 total customers – are purchasing electricity from competing providers. Fourty-six percent of total electricity demand is being met by competitive suppliers. There are 28 competing suppliers serving customers in PPL Electric Utilities’ service area, including nine suppliers for residential customers.

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.

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.