Press Release

PUC Releases Updated Estimates Comparing Current Market Prices with Capped Electric Generation Prices

Published on 10/22/2010

Filed under: Electric

HARRISBURG –The Pennsylvania Public Utility Commission (PUC) today released its quarterly comparison between current market prices for electric generation and capped rates currently paid by consumers.  The PUC said that the numbers validate the importance of current and future steps to mitigate potentially significant electricity rate increases.

According to the estimates, the market trended downward this quarter by about 10 percent for residential consumers when compared to the July 2010 electric price estimates. The Commission emphasizes that wholesale prices are subject to constant change and can be volatile.  The prices may stabilize or trend upward or downward in the future.  Therefore, the Commission will continue its actions to mitigate potential rate increases.  For customers, energy conservation and efficiency are recommended long-term strategies that should provide benefits regardless of where market prices trend in the future.

With that in mind, consumers can sign up for weekly e-mail alerts regarding the latest offers by competitive electricity suppliers in their service area at www.PAPowerSwitch.com. In Pennsylvania, consumers can choose the company that generates your electricity - also known as the electric supplier. This means consumers have the power to switch to a competing supplier who can offer the lowest price, or provide a specific service such as green/renewable energy.

On Dec. 31, 2010, all electric rate caps will expire and the utility price to compare (PTC) may change quarterly. The PTC is the price per kilowatt hour (kWh) your electric utility will charge. PAPowerSwitch.com provides consumers with the PTC for both the utility and the competitive suppliers making offers in the area, allowing consumers to make an apples-to-apples comparison for the generation portion of the bill.

The e-mail alerts will keep consumers in touch with the prices, enabling them to make decisions for their home or business based on the most current pricing information available. Areas where rate caps have not yet expired may not see any competitive offers at this time. Customers of Allegheny Power Co., Pennsylvania Electric Co., Metropolitan Edison Co. and PECO Energy Co. and can prepare for the January expiration of rate caps by signing up now to receive alerts when choices become available.

The charts released today show differences between capped rates and estimated market prices at the end of the second, third and fourth quarters of 2008, for all quarters of 2009 and for the first three quarters of 2010 for the four companies still under rate caps. The rate caps for Metropolitan Edison Co., PECO Energy Co., Pennsylvania Electric Co., and Allegheny Power Co. will expire Dec. 31, 2010. Information for PPL is not included because its rate caps expired Dec. 31, 2009.  The quarterly updates are available on the PUC website, www.puc.state.pa.us. Select “Electric” from the pull-down menu and select “Electric Price Estimates. This will be the last quarterly update, since the remaining caps expire at the end of the year. 

Wayne Williams, Ph.D., Director of the PUC Bureau of Conservation, Economics & Energy Planning (CEEP), said the calculations released today estimate the increases consumers would see, on average, if rate caps expired today and the state’s electric distribution companies still under caps immediately began charging prices based on current short-term market conditions.  The market price of electricity is very volatile and changes on a daily basis, and is subject to changes that result from factors over which the PUC does not have jurisdiction.  Director Williams noted that these estimates identify current market prices in the short term, in comparison with capped rates, and do not in any way represent a Commission projection of future prices when the remaining rate caps expire.  Actual post-rate cap prices for each utility will reflect a portfolio of resources, obtained over time, which will mitigate the effect of monthly and daily changes in the market rates for energy.            

For the remaining EDCs, whose caps have yet to expire, all auctions have been completed.  As a result, recent post-rate cap price auction results are provided. These prices reflect a portfolio of resources, obtained over time, which mitigated the effect of monthly and daily changes in the market rates for energy. This illustrates that if current market trends continue, consumers may be able to achieve better prices through a competitive electric generation supplier when rate caps expire.

The Commission has engaged consumer advocates and industry experts in efforts to mitigate any price increases in future electric generation prices.  The Commission has been working to educate consumers; develop strategies to remove barriers for suppliers providing competitive electric service; approve phase-in or pre-payment plans and direct all utilities to file such programs if electric rates increase by more than 25 percent; update low-income programs that provide budget assistance; and implement default service pricing that reflects the least cost to consumers over the long term.  The PUC also is continuing to explore reasonable, cost-effective programs that consumers and companies can implement to conserve energy or use it more efficiently.

For more information on what consumers can do to reduce their usage and prepare for electric rate cap expiration, visit the Consumer Education section of the Commission’s website.

The Pennsylvania Public Utility Commission balances the needs of consumers and utilities to ensure safe and reliable utility service at reasonable rates; protect the public interest; educate consumers to make independent and informed utility choices; further economic development; and foster new technologies and competitive markets in an environmentally sound manner. For recent news releases, audio of select Commission proceedings or more information about the PUC, visit our website at www.puc.state.pa.us.

Contact:

• Press Secretary
  717-787-5722