Pennsylvania Deregulation for 2010 and 2011, What to Expect?

by admin on April 22, 2010

Pennsylvania has done a great job in opening up their electricity market to deregulation but they haven’t opened it up all the way yet. The complete deregulation of the Pennsylvania electricity market is not far off.

The beginning of the PA electric service deregulation process involved ending the rate caps in PPL’s territory. This caused PPL electric utility to raise their rates because the caps were causing pressure on profits as energy fuel prices rose in price.

To remain profitable PPL electric utility had to raise electric rates because of the artificial market pressure they had on them.

Right now about 25% of the Pennsylvania electricity market is the PPL market. So as of right now 25% of PA can choose a competitive electricity company. Since PPL had to raise their electricity prices there could very likely be some significant savings by shopping around and choosing an alternative electric company in PPL’s territory.

An energy consultant licensed in PA can help both industrial businesses and small commercial facilities in finding a competitive electric rate for their company.

Right now only 40% of the state of Pennsylvania is open to electricity market competition. Everyone else must stay with the monopoly electric utility in their area of PA.

When the year 2010 is over the state of Pennsylvania is going to go ahead and open up competition in the 60.6% of the state that is still under monopoly electric utility control.

The phase in of the PPL electric utility area first allowed the state to see how the transition would go and to make sure the state could effectively operate a deregulated electric service market.

The PPL rate cap removal was obviously a success which allowed for competition to not be hindered and for the best price to win.

When looking at the rest of the state of Pennsylvania that is not deregulated you can see the break as follows:

PECO Energy, 27.8%
West Penn Power, 12.7%
Pennsylvania Electric, 10.6% and
Metropolitan Edison at 9.5%

The power marketers and state regulators will spend the rest of the year to get their software and regulatory requirements in order. There are unqiue requirements to the state of PA in order for an electric company to compete there and so time is needed to bring in more electric suppliers.

One of the aggressive PA electric companies already knocking on doors of large industrial and commercial facilities in still regulated utility areas is Suez Energy.

Even though there are still several months until these large commercial and industrial customers can choose a competitive electric company in PA Suez is hard at work to bring them over by pricing out contracts now.

Usually when pricing electricity agreements out that far in advance a commercial electricity customer will pay a pretty high premium to lock in the electric rate that early. It can sometimes be worth locking in early if the market is expected to go up dranatically over the course of the contract term.

Usually we have seen that in most cases unless you are in a perfect situation for doing so it is not worth setting a start date that far out in advance.

Some of the other succesfull deregulated electricity markets in the US are Texas, New York and Connecticut. Pennsylvania is expected to rival Texas in regards to the opportunity that will be available for retail electricity providers to compete against the old monopoly utilities there now.

The Public Utility Commission of PA has noticed a quick steady opening of competition in the now deregulated PPL area of PA and expects the same in the rest of the state.

Most electricity providers that have national expansion goals rank Pennsylvania near the top of their list to move into. Within 2 years PA should be very succesful in regards to switching commercial and industrial electric service customers to a competitive electric rate.

We expect the PA residential electricity market will also open up once commercial and industrial markets have been established as a success.

Using states like Texas as a benchmark and the experience power marketers have had there and in other states the state regulators and experienced energy companies should be able to make the PA electricity deregulation process a transition with minor hick ups.

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