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Pennsylvania Electricity Fully Deregulated

After more than 13 years, electricity deregulation has finally reached all four corners of Pennsylvania.

The electricity generation rate caps for the state’s last four rate-capped utilities — including PECO Energy Co., the state’s largest utility — expired Jan. 1, bringing full electricity deregulation to the remaining 60 percent of Pennsylvania ratepayers.

Under the Electricity Generation Choice and Competition Act of 1997, the rates charged for the generation, transmission, and distribution of electricity were capped in Pennsylvania to help the state’s newly deregulated energy market transition from monopolies to competitive retail energy companies.

The rate caps on transmission and distribution had already expired prior to Jan. 1, as had the rate caps on generation in seven of the 11 service areas across the state.

And now, with the expiration of the last rate caps, PECO customers have the power to choose which electric provider they buy their electricity from, which is likely a good thing, since electric rates are expected to climb.

“Because the market price of electricity has risen since rates were capped, the PUC expects that customers may see an increase in their bills after the expiration of the rate caps,” the Pennsylvania Public Utility Commission states on its website.

Choosing a New Electric Provider Can Mean ‘Significant Savings’

Fortunately, Pennsylvania consumers can choose any electric provider that services their area, such as Spark Energy, which means they can switch to an energy provider that may offer a lower price or provide a desired service.

According to the PUC, it’s also helpful for consumers to understand the three parts of electric service in a deregulated energy market: generation, transmission, and distribution.

Generation, meaning the production of electricity, is what consumers have the power to choose. No matter which of the alternative energy companies consumers buy electricity from, the electricity will be transmitted to the utility that services their area, such as PECO.

The utility will then distribute the electricity to consumers’ homes. The utility remains responsible for maintaining and fixing all of the equipment used for distribution, such as power lines, poles, and transformers, and for responding to emergencies and outages.

The PUC advises that switching to a new electric provider may provide significant savings, as electricity generation costs are the most expensive part of an average electric bill.

“In some areas, the electric supplier’s rate is as much as 10 percent cheaper than the default service price offered by the utility,” the PUC states on its website.

Sources

“Pa. Power Switch Help,” NBC Philadelphia, Jan. 18, 2011.

The Pennsylvania Public Utility Commission, “The Expiration of the Electric Generation Rate Cap,” January, 2010.

The Pennsylvania Public Utility Commission, PA Power Switch brochure.

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