The end of 2009 also marks the end of rate caps in the PPL Electric Utilities (PPL) territory. The state legislature tried to bring about legislation to stall the expiration of rate caps, but since that was not completed prior to the end of this year’s session, many customers are left wondering about now only what rate caps are, but how much their bills will increase, and what they can do to “shop” for better prices.

As part of the restructured electricity market created by the Act, customers have the right to choose who supplies the generation portion of their bill. Under the law, your current electric company is required to maintain the transmission and distribution (or the wires) part of your electric service, even if you choose a different supplier for your generation. Once rate caps expire, customers can shop around for a better deal.

Rate caps and your electric bill
To fully understand the impact of rate caps and how to shop for a competitive electricity supplier, the first step is to examine what makes up your electric bill.

• Generation: the actual electric power you consume at your home or business, measured in kilowatt-hours (kWh).
• Transmission: the movement of electricity from where it is produced to the wires that distribute the electricity to your home or business.
• Distribution: the wires that deliver the electricity directly to your home or business.
• Customer charge: a monthly fixed charge that covers part of the costs associated with meter reading, billing, line maintenance, and equipment. The charge appears every month whether or not a customer uses electricity.
• Competitive Transition Charges (CTC): a temporary charge to cover costs of previous utility investments in building power generation. This charge expires when rate caps end.

In 1996, Pennsylvania's electric rates were 15 percent higher than the national average. To help address the high cost of electricity, Pennsylvania's "Electricity Generation Customer Choice and Competition Act" (Competition Act) was signed into law on December 3, 1996. The Competition Act ended electric utility monopolies and capped generation rates at 1996 levels.

While certain increases were allowed, generation rates generally have remained stable for more than 10 years. Today, Pennsylvania electric customers are paying 5 percent below the national average. When your rate caps expire, it is only this generation portion of your bill that will increase to reflect the current wholesale market price of power.

How to Shop for Better Rates
Once rate caps expire in your service territory, rates will reflect the current wholesale cost of supplying generation, which allows other suppliers to enter the market and offer competitive pricing.

If your rate caps have expired and you are interested in switching to a competitive supplier, the first step is to compare pricing. To aid customers in shopping for the best deal, the industry has created a standard "Price to Compare." If a competitive supplier's price is lower than the one offered by your utility, you can save money by switching to that supplier. It really is as simple as picking up the phone and asking to make the switch. The competitive supplier will even contact the utility for you and take care of the switch. Your current utility will continue to provide the transmission and distribution portion of your electric service and those rates will still be regulated by the Public Utility Commission (PUC).

One important point is that the reliability of your electricity will be unchanged whether you shop or not. The delivery of electricity is still fully regulated by the Public Utility Commission, and the same requirements will be in place, keeping outages as infrequent as possible and fixing problems without delay.

Prices can be compared at the Pennsylvania Office of Consumer Advocate's (OCA) Web site. The OCA frequently updates its Residential Electric Shopping Guide, which shows the "Price to Compare" for utilities and for competitive suppliers. The guide also provides sample pricing and phone numbers to make the switch as easy as possible. The OCA can also be reached by calling 800-684-6560. You can also obtain your "Price to Compare" from your current utility.

The PUC maintains a list of licensed competitive generation suppliers in Pennsylvania. To date, there are 64 companies approved to offer generation supply in the state. Further information on competitive suppliers broken down by utility service territory and customer rate class can be found on Pennsylvania Utility Choice Program's Web site or by calling 888-PUC-FACT (888-782-3228).

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