Caps off, rates up, choices spotty for PPL customers

PPL's rate caps are off, its electrical rates are up, and your choices as a consumer are spotty.

After a 13-year transition to deregulation, local electrical supplier PPL implemented its 2010 New Year's resolution, an increase of nearly 30-percent in rates for electrical power to residential customers.

It reflects about a 50-percent increase in the generation charge and no increase in the transmission or distribution charge, for a 30-percent overall bill increase to the consumer.

That means that during the milder months when heating and a/c are not required, when the average home uses about 1,000 kilowatt hours per month, the typical home electrical bill will increase from about $75 to about $105. This could double during the winter months if the home is electrically heated.

If a home uses 1,000 kWh for the six milder months and 2,000 kWh for the six hot and cold months, homeowners could see their annual cost for electricity increase from around $1,320 to $1,890, an increase of around $570. This calculation is only an example as every home will have different conditions.

While changes will be taking place throughout the Commonwealth of Pennsylvania, PPL's customers in northeastern Pennsylvania are one of the first to have the rate cap removed. This comes at a most inopportune time. Inopportune because the poor economy will make it unusually difficult for some people to absorb greater expenses, and because PPL, in anticipation of the removal of the rate caps, had pre-purchased power at a time when energy prices were near their peak.

The combination of PPL being able to pass along its costs to its customers, and having higher costs than its competition is motivating its customers to look at alternatives through the Energy Choice Program.

Most commercial customers have already switched to lower price electrical generating companies. Residential customers are becoming aware of the Energy Choice Program and according to PPL, about 150,000 of its 1.4 million customers have changed to another electricity generation company.

Under the Energy Choice Program, consumers choose their electrical power supplier. PPL customers will still deal with PPL, since PPL transmits the power from the supplier and distributes the power to homes. PPL will continue to service the home, and will bill for all electrical power, including the generation purchased from a second company.

Under the new system, PPL will charge a single rate per kWh regardless of how much electricity a home uses. Previously, they had a separate rate for the first 200 kWh, the second 600 kWh, and so on. Beginning in 2010, there will be a single rate. Also, the Generation Charge and the Transition Charges, shown separately in the current bill, will be combined. The Transition Charge was intended to recover power plant capital costs during the transition preceding full deregulation. The new rate is called the "Price to Compare."

PPl's rate is currently about 10.5 cents per kilowatt-hour. Conventional fueled generation competitors are offering savings of about 10 percent. These include: Con Edison Solutions, Direct Energy, Dominion Energy, Liberty Power Holdings, and MXenergy. Green energy products which include Direct Energy Renewable Wind Plan, Community Energy (wind power), and PPL Energy Plus (energy credits) are available at a price higher than basic PPL.

Choosing an electrical generation company requires a series of decisions:

1. Should I decide now or wait. Currently, including PPL, there are seven companies, some offering several options. As this is an emerging business, new, possibly more competitive entries, are expected to be added.

2. Should I accept an early cancellation fee? Piggybacking on the cell phone contract concept, some energy supply contracts require acceptance of an early cancellation fee if you decide to change companies before the end of the contract. You have to decide if the risk of a cancellation charge is worth lower rates.

3. How long should I contract for? A contract fixes your price for a period of time when the market price may rise or fall. Changing may be free with some companies, or may require an early cancellation fee with others.

4. Do I want Green power? There are choices among conventional fossil fuels, wind energy, and energy credits. These are all at prices that are higher than the competition. There is a third choice that is not listed - nuclear energy, the base load for PPL in Pennsylvania. Although it is not a renewable resource and has issues related to radiation, it does not produce greenhouse gases.

A complete listing of PPL's Energy Choice Program options is online at: www.oca.state.pa.us/Industry/Electric/elecomp/PPl.pdf. After reviewing the choices, the quickest way to sign-up with a new energy generation supplier is to go to their Web site. You can also sign up by telephone but expect long hold times.

"Now's a good time to do it," said Pennsylvania Consumer Advocate Sonny Popowsky, "if you want to get the full benefit for 2010. In fact, you'll only get 11 months benefit at this point. It's a good time to look into it. I'm not suggesting that anyone has to shop, but now's a good time to certainly look into it. We have enough choices, and the choices are good for the whole year of 2010."